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E a s t A f r i c a Q u a r t e r l y B u l l e t i n

East Africa Quarterly Bulletin

VOLUME 2, ISSUE 2

SECOND QUARTER 2013

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BURUNDI

KENYA

RWANDA

SEYCHELLES

TANZANIA

UGANDA

Special Theme:

Tanzania’s infrastructure connectivity as a development opportunity for East Africa

CONTENTS

REGIONAL OVERVIEW 3

COUNTRY UPDATES 6

SPECIAL THEME 35

RESULTS ANNEX 43

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The East Africa Quarterly Bulletin is produced by country economists of the African Development Bank Group’s (AfDB) East Africa Regional Resource Center (EARC). The publication covers all five member states of the East African Community (EAC) and the Seychelles. It is part of the AfDB’s monitoring of socio-economic developments across the continent and provides summary information on the previous quarter’s major developments across the sub-region for which quarterly data are available on a timely basis. Each Bulletin also contains a dedicated section on a special theme. This issue looks at Tanzania’s infrastructure connectivity as a development opportunity for East Africa. As a novelty, starting with this issue, each country chapter now also features a separate section on results achieved during the quarter under review, including an exposé on a ‘flagship’ project or program that has made a significant contribution to improving the livelihoods of the people in the respective country. A detailed presentation of the results achieved by the Bank’s projects in each country is provided in the Annex. The Bulletins are based on information gathered through consultations, review of country documents, and other relevant sources. Contributors to this issue include Bernis Byamukama, John Baffoe, Prosper Charle, Josef Loening, Susan Mpande, Vera Oling, Joel Tokindang, Walter Odero, Alexis Rwabizambuga Tilahun Temesgen, Orison Amu, Lawson Zankli Late, Halima Hashi, Daniel Isooba, Daniel Lekoetje, and Brice Mikponhoue. Edward Sennoga also contributed to this issue and is the production editor for the Bulletins, which is led by Stefan Muller, Lead Economist, EARC. Gabriel Negatu, Regional Director, EARC, as well as the respective Resident Representatives of the AfDB in Burundi (Abou Ba), Rwanda (Negatu Makonnen), Tanzania (Tonia Kandiero), and Uganda (Jason Mochache, OIC) provided guidance. The special theme in this issue was authored by Josef Loening. Please direct your feedback and comments to [email protected] and [email protected]. © 2013 African Development Bank Group Angle de l’avenue du Ghana et des Rues Pierre de Coubertin et Hédi Nouira BP 323 -1002 TUNIS Belvédère TUNISIA Tel: +216 71 333 511 / 71 103 450 Fax: +216 71 351 933 E-mail: [email protected] Web: www.afdb.org

LEGAL

DISCLAIMER

The findings, interpretations and conclusions expressed in this report are those of the author(s) and are not necessarily those of the African Development Bank Group. Every effort has been made to offer the most current, correct and clearly expressed information possible in the preparation of this document. Nonetheless, inadvertent errors can occur, and applicable laws, rules and regulations may change.

The African Development Bank Group makes its documentation available without warranty of any kind and accepts no responsibility for its accuracy or for any consequences of its use.

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I | REGIONAL OVERVIEW Macroeconomic Developments, Monetary and Fiscal Policy Economic growth in the countries covered by this review was modest to strong during Q2 2013 and was driven by diverse factors. In Uganda, real GDP growth at 5.1% in June 2013 was slightly below the projected 5.4% for the same period and was driven by a recovery in industry and services. For Rwanda, the composite index of economic activities showed a moderate expansion for the year ended June 2013 in part due to the tight monetary and fiscal policies implemented during the second half of 2012 to accommodate the aid-cut backs. In Seychelles, the tourism sector continued to drive economic activity due to a recovery in tourist arrivals particularly from Europe. Indicators of economic activity for Burundi, Kenya and Tanzania reveal that the Q2 2013 growth projections are likely to be achieved. The outlook for the region during the remainder of the year is contingent on various factors, including peace and security in the Great Lakes region and the implementation of the recently announced trade and investment partnerships between the region and its strategic allies in the west and Asia. Monetary and fiscal policy focused on maintaining macroeconomic stability, fiscal consolidation to expand the fiscal space for public spending on productivity-enhancing investments, and ensuring debt sustainability. Key macroeconomic indicators such as inflation, exchange rates and fiscal balances point to policy effectiveness during the period under review. Year-over-year headline inflation has been maintained at single digit levels and with all the countries under review experiencing declines except for Kenya which experienced a slight increase. Prudent monetary policy, good harvests, and stable exchange rates contributed to the receding inflationary pressures. A major event during the quarter under review was the unveiling of the fiscal year (FY) 2013/14 budgets for all partner states except Seychelles (where the FY coincides with the calendar year, hence no new budget was prepared) and Burundi, which adopted a revised budget for the reminder of FY 2013 in part to accommodate expenditure slippages. A common underlying theme across the FY 2013/14 budgets is scaling up investments in productive sectors as well as human development to accelerate inclusive growth and poverty reduction. Investments in infrastructure, particularly transport and energy, are key priorities across all countries. In Kenya for instance, 5.3% of GDP has been earmarked for energy, transport and ICT representing over 70% of the entire budget allocated to productive sectors while in Uganda, 33% of the budget has been allocated to roads and energy compared to 29% in the previous fiscal year. Similarly in Rwanda, the share of the budget allocated to productive sectors is projected to increase by 7 percentage points to 30.8% in FY 2013/14 compared to FY 2012/13. Domestic resources mobilization is another priority, particularly broadening the tax base and improving efficiency in tax administration. Regional Developments The Inter-ministerial Committee of the International Conference on the Great Lakes Region (ICGLR) met in Nairobi, on 29th and 30th July 2013 to deliberate on

HIGHLIGHTS

Economic growth was modest to strong in the region, driven by diverse factors including recovery of tourism and stronger performance of industry and service sectors

Monetary and fiscal policies were focused on maintaining macroeconomic stability while expanding the fiscal space for public spending in productivity enhancing investments


the challenges encountered in the implementation of the UN and AU backed Peace, Security and Cooperation Agreement for the Democratic Republic of the Congo (DRC) and the Great Lakes region. The committee also made preparations for the 31st July 2013 extraordinary summit of Heads of State and government which was attended by the 11 African countries that signed on to the DRC peace agreement. The summit, among others, resolved to: (i) use dialogue as a means of ending protracted conflicts in the region; (ii) support the Kampala dialogue process on the DRC conflict,; (iii) accept Kenya's and Sudan's request to become integral parties to the DRC peace process; and (iv) encourage Rwanda and the DRC to continue with their bilateral discussions in order to strengthen mutual confidence and cooperation between the two states. The ICGLR will work jointly with the UN and the African Development Bank to mobilize funds to support peace and security programs in the DRC and across the region. The Presidents of Uganda, Kenya and Tanzania held a tripartite meeting in Kampala on 25 June 2013 to discuss various aspects of regional integration. The three leaders agreed on the following actions: (i) Railways: agreed to revamp the existing Mombasa-Nairobi-Kampala railway network and also construct a new standard gauge railway line and extend it to Kigali; (ii) Oil Refinery: explore the possibility of EAC partner states investing in the oil refinery to be constructed in Uganda; (iii) Electricity: enhance electricity generation and distribution; iv) Customs Territory: to implement commitments leading to the establishment of the single customs territory; (v) Fast track the implementation of the political federation; and (vi) Fast track the use of national identification (e-identity) cards for EAC residents as travel documents within the region and the establish the EAC single tourist visas to facilitate the tourist industry in the region. The three leaders also agreed on the following distribution of responsibilities: (a) Republic of Uganda to spearhead the development of railway infrastructure and political federation; (b) Republic of Kenya to spearhead electricity generation and distribution and oil pipe development; and (c) Republic of Rwanda to spearhead the establishment of the single customs territory, the single tourist visa, and EAC e-identity card. These commitments represent a major step in implementing the principle of variable geometry and are expected to provide a new impetus for regional integration in the EAC. The three countries agreed to meet every two months to discuss implementation progress on the agreed commitments Results Achieved by Bank Operations in the Region As a novelty, this Bulletin issue also presents selected outputs and outcomes achieved during the first half of 2013 by the Bank’s investments in the countries covered. The results achieved demonstrate that the Bank’s operations have made significant contributions to improving the livelihoods of the people. For example, in Rwanda, support to water and sanitation has funded the construction of 8 water supply systems thus enabling over 174,000 people to benefit from new or improved access to water and reducing the average travel time to the nearest water point from 1 hour to less than 10 minutes. In Burundi, following the successful implementation of the project to rehabilitate and expand water infrastructure in rural areas, an estimated 67,000 households in Gihosha, Bujumbura district, have access to drinking water while in Kenya, household incomes in eight counties increased from Ksh 9,500 to Ksh 60,000 following the rehabilitation of irrigation schemes. In Seychelles, the 1,900 km Submarine Cable reduced the bandwidth cost from USD 50/month in 2010 to USD 13/month as of

The East Africa Tripartite Heads of States meeting agreed on key transformative regional integration initiatives

Bank support to the countries of the region has significantly improved the livelihoods of people, including access to improved water sources, increased household incomes and reductions in the cost of electricity

Key results:

In Rwanda and Burundi 174,000 and 67,000 people, respectively, gained access to water

In Kenya, incomes of 214 households in 8 Counties increased from Ksh 9,500 to Ksh 27,760 per month


June 2013, thereby making Internet access more affordable, while in Uganda the completion of the 100 km transmission line under the Bujagali interconnection project contributed to a reduction in the unit cost of electricity from USD 0.25 to USD 0.13 and public savings of USD 9.5 million per month from the elimination of energy subsidies. In Tanzania, over 200,000 new jobs were created by the Small Entrepreneurs Loan Facility II project, with 50% of these jobs going to women. In the following, the country chapters present in more detail the macroeconomic developments and the results achieved by Bank projects during the first half of 2013.

In Uganda, the cost of electricity decreased from USD 0.25 to USD 0.13, yielding public savings of USD 9.5 million per month

In Seychelles, the cost of Internet access decreased from USD 50/month in 2010 to USD 13/month as at June 2013

In Tanzania, over 200,000 new jobs were created, with 50% of these jobs going to women


II | COUNTRY UPDATES


BURUNDI

MACROECONOMIC DEVELOPMENTS Table 1 – Selected Macroeconomic Indicators*

Q1 2013 Q2 2013

Real GDP growth (%) 4.5 4.5(p) Inflation rate (CPI, %)) 8.0 7.5 Fiscal balance (15.3) (22.5) Total expenditure 105.3 131.5

Capital 12.3 25.5 Total revenue 115.0 109.0

Tax and non-tax revenue 90.0 85.6 Grants 25.0 23.4

External current account balance (169.2) (214.3) Imports 190.0 234.5 Exports 20.8 20.2

Exchange rate (USD / FBu) 1,650.2 1,546.8 International reserves (in months of imports) 3.0 2.9 (p) Total public debt (stock) 717.2 (p) 747.2 (p)

External 395.3 (p) 391.3 (p) Domestic 321.9 (p) 355.9 (p)

*All figures in millions US Dollars unless indicated otherwise Source: National Authorities and author computations Economic Performance The 4.5% real GDP growth forecast for Q2 2013 is expected to be achieved on account of good harvests and sustained investments in public infrastructure in particular transport, energy, and telecommunication. The outlook for the remainder of 2013 is mixed, given the continued fragile global economic environment and socio-political tensions in the Great Lakes region which could potentially affect tourism, trade, and foreign direct investment. A series of investor conferences are being planned by the authorities to mobilize private sector funding and partnerships to ensure that the country’s investment program is implemented.

HIGHLIGHTS

The 4.5% real GDP growth forecast for Q2 2013 is expected to be achieved due to good harvests and sustained public infrastructure investments


Fiscal Policy and Public Debt Burundi’s economy experienced a series of negative shocks that adversely affected economic activity and the implementation of government’s fiscal policy during the quarter under review. Reductions in budget support (estimated at 2% of GDP) and revenue shortfalls constrained government spending. The decline in public revenue was estimated at FBu 49 billion (USD 32 million and 3.9% of the FY 2013 budget) as at May 2013 and the shortfall is projected to increase to FBu 92 billion (USD 60 million and 7.5% of the FY 2013 budget) at end-December 2013. Revenue collections during the quarter under review amounted to FBu 129.5 billion (USD 85.6 million), a decrease of 11% compared to the previous quarter. The revenue shortfall during this period primarily resulted from: (i) lower revenue following the implementation of the new income tax legislation which raises the income tax threshold to FBu 150,000 (USD 97) from FBu 50,000 (USD 32) previously, and (ii) the slowdown in economic activity resulting from the destruction by fire, in January 2013, of the Bujumbura central market whose quarterly turnover was estimated at FBu 4.5 billion (USD 29 million). Revenue during the first half of 2013 increased to FBu 270.3 billion (USD 174.4 million) compared to FBu 260.7 billion (USD 168.2 million) realized during the same period in 2012. However, the increase in revenue collections during the first half of 2013 was largely due to a change in the payment due dates for corporate income taxes from October to June. On the expenditure side, spending on priority areas such as education, health, agriculture was lower than programmed by 3% owing poor revenue performance and delayed disbursements by some donors due to the slow progress made in the implementation of reforms. Consequently, the budget execution rate for the FY2013 budget was 44.1% at the end of Q2. The authorities adopted a revised budget in June 2013 to accommodate the revenue shortfalls. The revised total expenditure are FBu 1389.9 billion (USD 896.7 million), a decrease of 1% from the initial budget while revenue and grants were revised downwards by 2.4% to FBu 1,123.2 billion (USD 724.6 million). All expenditure categories were revised downwards, with major revisions in the energy sector – investments (24%) and transfers and subsidies (4.6%). New revenue enhancing measures were also identified and are projected to yield FBu 20 billion (USD 14 million) in additional revenue. Reforms to safeguard debt sustainability contributed to a reduction in the stock of public debt by 1% between Q1 and Q2. However, the stock of domestic debt stock increased by 11% from USD 321.9 million in March 2013 to USD 355.9 million in June 2013 due to government’s increased domestic borrowing to bridge the public revenue shortfalls. The World Bank’s debt management performance assessment mission of April 2013 recommended measures to strengthen public debt management capacity with emphasis on putting in place the requisite legal framework. Monetary Policy and Financial Sector The monetary policy stance in Q2 2013 has basically remained unchanged compared to the previous quarter and during 2012 with the central bank’s policy rate at remaining unchanged at 12%. Credit to the economy increased by 3.0% to FBu 615.3 billion (USD 397.8 million) between Q1 and Q2 due to the entry of two new banking institutions. Burundi's year-on-year headline inflation rate increased to 11.4% in June 2013 from 8.2% in May and 3.1% in April. The June headline inflation rate is also the

Reductions in budget support and revenue shortfalls constrained public spending

A revised budget was adopted in June 2013 to accommodate the revenue shortfalls

The central bank maintained its key policy rate at 12% in spite of the rising inflationary pressures


highest inflation rate realized since December 2012 and was driven by increases in food and fuel prices, which jointly account for 70% of the consumer price index. Food price inflation increased by 14.4% in the year to June 2013, up from 9.6% in May due to the dry season. Headline inflation is projected at 14% at end-2013 and higher than the 11.8% recorded in 2012, primarily due to rising food and fuel prices. Notwithstanding these inflationary pressures, the central bank is yet to signal any plans to change its monetary policy stance. The Burundi Franc appreciated slightly against the US Dollar during Q2 2013 but depreciated by 7% against the US Dollar compared to the same period of 2012. Following the sharp depreciation of the local currency against the USD in February 2013, the central bank implemented measures in March 2013 to stabilize the exchange rate, including scaling up its strategic interventions on the foreign exchange market to eliminate exchange rate volatility and limiting foreign exchanges purchases from commercial banks. External Sector Burundi suffers from an acute imbalance between imports and exports despite the various initiatives undertaken by the authorities to boost economic and export diversification. Burundi's import bill increased by 23% to FBu 664.1 billion (USD 234.5 million) between Q1 and Q2 driven up by rising fuel and vehicles/parts imports which jointly accounted for 50% of total imports. Exports remained stable between Q1 and Q2 at around USD 20 million. Imports and exports increased by 30% and 3% respectively during the first half of 2013 compared to the same period in the previous year. The current account deficit at end-June 2013 at USD 214.3 million was higher than the USD 169.2 million recorded at end-March due to reduced coffee export receipts and the strong growth in imports particularly to support investments in the infrastructure sector. The recent reductions in aid inflows have also contributed to the increased current account deficit. Consequently, Burundi’s overall balance of payments continued to post a deficit, estimated at about 1.2% of GDP in June 2013 compared to 1.1% in December 2012 yielding a decrease in import cover from 3 to 2.9 months during this period.

OTHER NOTABLE DEVELOPMENTS AND UPDATES Political Developments The Government promulgated in June 2013 a media law that among other things, requires journalists to reveal their sources of information, imposes fines for breaking the law and obliges journalists to hold a university degree. Observers including development partners have indicated that the new legislation infringes upon the principles of press freedom and is seen as a relapse in reform momentum in light of recent progress in implementing political and economic governance reforms. Private Sector Activity Government adopted the National Strategy for Private Sector Development (SNDSP 2014-2020). This strategy proposes key reforms that will support improvements in the business regulatory environment for structural transformation and inclusive growth. The strategy identifies key policy actions for promoting investment, infrastructure development and public-private partnerships as well as enterprise

Large imbalances between imports and exports persist in spite of efforts to promote economic and export diversification

The Government promulgated a new media legislation widely considered as an effort to curtail freedom of the press


development particularly in the areas of business and trade regulation, access to finance, taxation and human capital development. Donor Relations Burundi and Belgium in June 2013 signed a US$ 52.9 million grant agreement to support the country’s new national policy on universal access to free and compulsory primary education for the period 2013-2016. The grant is expected to contribute to achieving parity between girls and boys in terms of access to education and a reduction in adult illiteracy. The IMF and the authorities held discussions in June within the context of the third review of the IMF supported Extended Credit Facility (ECF). Implementation of the program has been challenging and plagued by slippages in achieving public revenue targets. The mission encouraged the authorities to improve public finances by accelerating revenue mobilization efforts, reprioritizing expenditures, and improving public financial and debt management.

RESULTS ACHIEVED

Selected outputs and outcomes from the Bank’s portfolio during January-June 2013 The Bank’s operations in Burundi have achieved positive development results during the first semester of 2013, entailing significant improvements of the living conditions of the people. Specifically, in the transport sector, the completion of the Nyamitanga-Ruhwa road (50.6 Km) and the Ngozi-Nyangungu road (25 km) has had positive impacts in terms of job creation in the municipalities concerned, transportation of goods and people, access to social infrastructure such as schools and health centers. In the agriculture sector, the development of wetlands and watersheds led to the creation of jobs and the protection of farmland. Under the Bugesera Agricultural Development Support Project (PAIRB) for example, the provision of 518 cows and 2,100 goats to households has improved soil fertility through increased availability of organic manure. An increase in food production is also expected. In addition, the project has enabled the development of 299.5 ha of watershed and 100 ha of marshland. With regards to the Lake Tanganyika Integrated Regional Development Program (PRODAP), activities undertaken during the period under review were oriented to strengthening capacities of more than 400 members of the fishermen committees to improve the protection of fisheries resources in the lake and distribution of 720 utilities for drying and smoking fish. In the water and sanitation sector, a total of 67,000 households in rural Gihosha (Bujumbura district) now have unlimited access to drinking water, following the successful implementation of the ‘Project to support the rehabilitation and expansion of water infrastructure in rural areas’. A detailed presentation of the results achieved by the Bank’s projects in Burundi during the first semester of 2013 is provided in Annex 1, Table A.1

Burundi and Belgium signed financing agreements to support universal access to primary education for the period 2013-2016

Key results:

518 cows and 2,100 goats provided to households across the country

67,000 households in Bujumbura district have access to drinking water

Nyamitanga-Ruhwa (50.6km) and Ngozi-Nyangungu (25km) roads completed


Flagship Project: The Multi-sector Project for Socio-Economic Reinsertion (PMRSE) In January 2005, the Bank and Burundi signed a Loan Agreement for an amount of UA 8.5 million for the PMRSE (2004-2013) and this project has contributed to the socio-economic integration of disadvantaged groups, including through job creation with a focus on labor-intensive public works for the construction of infrastructure and improving access to basic social services (health, education, vocational skills, sanitation) including during the first half of 2013. The project had three components: (i) direct job creation through the construction of basic infrastructure, (ii) capacity building; and (iii) support to community initiatives. Prior to the PMRSE, the situation of schools in the project area was characterized by aging infrastructure that did not meet the required standards (brick walls of earth, without windows, with tarps as roof, pupils standing or sitting on rubble). The construction of school facilities by PMRSE

contributed significantly to the creation of a more conducive teaching and learning environment for teachers and students in the project area. This resulted in marked reductions in school dropout rates. Consequently, the enrollment rate has risen sharply, from an average of 65% to 80% between 2008 and 2012. Completion rates have also improved from 60% to over 80% during this period. The PMRSE has also supported: (i) income generation activities for poor households including through supporting SMEs to participate in public works delivery; and (ii) improvements in economic and social infrastructure through the construction of 8.5 km pavement, drainage of rainwater, rehabilitation/ construction of 19 primary schools and about fifteen health centers including testing units of HIV/AIDS and care for patients. Thus, the PMRSE has contributed to the country’s post-conflict reconstruction and transition from an emergency humanitarian phase to social and economic

reconstruction.

Selected Indicators for schools constructed by the project

Primary Schools

Academic year 2008-09 2009-10 2010-11 2011-12

Gross enrollment rates (%) Buhanda 59.4 64.2 53.7 75.5 Kinanira 65.4 69.7 74.3 80.5 Rutanganika - 66.5 72.4 79.4 Runyoni 67.0 72.3 86.7 89.8 Sakinyonga 99.3 95 109.2 Average success rate (%) Buhanda 67 68 70,2 77,8 Kinanira 65 67 70,4 76,6 Rutanganika - 74.2 73.0 80.3 Runyoni 67,4 56.7 61.1 69.6 Sakinyonga - 61.5 66.9 55.3


KENYA


Q1 2013 Q2 2013

Real GDP growth (%) 5.2 - Inflation rate (CPI, %) 4.08 4.91 Fiscal balance -2,600 -2,772 Total expenditure 8,600 11,637

Capital - - Total revenue 6,000 8,865

Tax revenue - - Grants - -

External current account balance -3,399 -4,699 Imports 5,964 6,186 Exports 15,771 16,919

Exchange rate (USD / KSh) 85.6 85.5 International reserves (in months of imports) 3.78 4.29 Total public debt (stock) 21,000 22,300

External 9,555 9,737 Domestic 11,445 12,563

*All figures in million US Dollars unless indicated otherwise Source: National Authorities and author computations Economic Performance The economy grew by 5.2% during the first quarter of 2013 compared to a growth of 3.9% realized during the same quarter in 2012. The growth figures for the second quarter of 2013 have not been released yet but are expected to compare favorably to those of the previous quarter. The first quarter of 2013 was characterized by good weather conditions for some key crops, which resulted in an improved performance of the agricultural sector. On the other hand, a wait-and-see approach adopted by producers and consumers in the context of the March 2013 general elections led to a slow-down of activities in manufacturing, hotels and restaurants and financial intermediation. Kenya’s economy is projected to grow at 6% in 2013, mainly driven by increased investments given the peaceful political transition, as well as increased tourism and exports.

HIGHLIGHTS

Favorable weather conditions and the successful completion of the March 2013 general election are expected to drive economic growth during the second half of 2013


Fiscal Policy and Public Debt The central government budgetary operations for the eleven months to May 2013 of FY 2012/13 resulted in a deficit of Ksh 236.9 billion (6.3% of GDP), on a commitment basis, compared to Ksh 161.1 billion (4.9% of GDP), incurred during the same period of FY 2011/12. The deficit was within the Ksh 397.9 billion (10.5% of GDP) target for the period. The central government cumulative revenue collection including appropriations in aid as at end of May 2013 amounted to USD 8.9 billion up from the March 2013 figure of USD 6 billion. The central government cumulative expenditure and net lending for the period ending May 2013 amounted to USD 11.6 billion compared to the March 2013 figure of USD 8.6 billion. The continued slow uptake was still largely attributed to low absorption in operations and maintenance, as well as slow utilization of domestically and foreign financed development expenditures. Kenya’s public and publicly guaranteed debt increased by Ksh 283.7 billion (USD 3.3 billion), or 17.5%, during the period to May 2013 of FY 2012/13 to reach Ksh 1907.0 billion (USD 22.3 billion) from Ksh 1,623.4 billion (USD 19 billion) at the end of June 2012. The total debt-to-GDP ratio increased to 52.1% in May 2013 from 46.6% at the end of the previous quarter on account of domestic debt which increased from 26.1% to 29.3% of GDP. External debt to GDP ratio declined to 22.7% from 23.2% in June 2012. In June 2013, President Kenyatta signed the new budget for FY 2013/14 into law. This is the first budget to implement a comprehensive process of devolution of power (Executive, Legislative and Judiciary) from the central level to 47 Counties, setting aside Ksh 210 bn (USD 2.4 bn) out of a total budget of Ksh 1.6 trillion (USD 18.8 bn) for the Counties. Overall, there is a 12.3% increase in the FY 2013/14 budget relative to the previous budget. The most significant increase in sector allocations is the 38.85% increase for devolution, security, judiciary, and the parliament. Allocations to the social sectors increased by only 2.86% over last year’s budget while that for the productive sectors (agriculture and rural development; infrastructure) decreased by 16.6%. Total revenue is projected to increase by 8% over the FY 2012/13 budget as a result of the introduction of new tax policies. The overall budget deficit (including loans and grants) is projected at about 8% of GDP compared to 7.2% of GDP in the FY 2012/13 budget. Monetary Policy and Financial Sector Inflation eased considerably to an average of 4.08% during Q1 2013, from 16.87% in the corresponding quarter of 2012. However, inflation increased to 4.91% at the end of June 2013 as the prices of most food crops remained relatively stable while other prices showed an upward trend. Between May and June 2013, the food and non-alcoholic drinks Index increased by 0.18% due to price increases outweighing decreases in the prices of various food items. The housing, water, electricity, gas and other fuels’ index declined by 0.03% during the same period, mainly due to declining electricity cost. The transport Index decreased by 0.66% mainly due to a reduction on the pump prices of petrol and diesel. The Kenyan Shilling depreciated against all major international currencies except the South African rand. The Kenyan shilling exchanged at an average of KSh 85.49, KSh 132.48, KSh 112.81, KSh 87.77, KSh 8.51, KSh 30.34 and KSh 19.13 against the

The fiscal deficit continued to rise on the back of increased public spending in spite of the pick-up in revenue collections

In June 2013, the new FY 2013/14 budget was signed into law. It is Kenya’s first budget to implement a comprehensive process of devolution of powers from central level to 47 Counties

The Central Bank of Kenya continued its gradual easing of monetary policy to support economic growth, while maintaining price stability


US dollar, sterling pound, Euro, Japanese Yen, South African rand, the Ugandan and Tanzanian shilling respectively, as at the end of June 2013. Foreign exchange reserves held by the Central Bank (CBK) stabilized at USD 5,843 million, equivalent to 4.29 months of import cover. This was an increase from the March 2013 figure of USD 5,052 million, equivalent to 3.78 months of import cover and USD 5,396 million, equivalent to 4.24 months of import cover, at end-December 2012. CBK has continued to pursue a gradually easing monetary policy stance since July 2012. The Central Bank Rate, which was maintained at 18% from January to June, 2012, was reduced gradually to 9.5% in March 2013 and finally to 8.5% during the quarter under review. The overall aim of the monetary policy stance is to ensure low and stable inflation, enhance financial access, encourage economic growth, and ensure long-term sustainability of public debt. External Sector Kenya’s current account deficit increased by 22.4% to USD 4, 699 million in May 2013, compared to 3,839 million in May 2012. The deterioration is largely due to a 7.3% (or USD 1,148 million) increase in payments for imports of goods against marginal improvements in receipts from the exports of goods. The trade balance widened from a deficit of US$ 9,807 million in May 2012 to a deficit of US$ 10,733 million in May 2013. Net capital and financial inflows helped to finance the huge current account deficit. Kenya’s overall balance of payments position improved from a surplus of US$ 177 million in May 2012 to a surplus of US$ 1,249 million in May 2013. The improvement is attributed to an increase in the capital and financial account surplus, which has been larger than the widening current account deficit.

OTHER NOTABLE DEVELOPMENTS AND UPDATES Political Developments and Institutional Reforms Following the election of 47 County Governors in March 2013, Kenya embarked on a comprehensive process of devolution. While the process commenced smoothly, tensions have occurred in relation to the transfer or responsibilities and funds to the Counties. Major institutional reforms involved the setting up of new County offices, with the recruitment of staff ongoing. At the national level, the new Government re-organized the public administration, including a significant reduction in the number of ministries from 42 to 18. Ministers were appointed from outside Parliament. The Legislature completed its reorganization with Speakers elected for both the new Senate and the National Assembly, while various committees were also established. The Judiciary continued with the vetting of Judges and Magistrates for confirmation in their jobs. Donor Coordination and Aid Effectiveness Kenya’s Aid Effectiveness Group which monitors the implementation of international commitments on aid effectiveness met once in Q2 2013 to discuss a new Aid architecture. Furthermore, the Government started the preparation of Guidelines governing the mode of cooperation between Development Partners and County Governments.

The Kenyan Shilling depreciated slightly but remained stable against major currencies

The Balance of Payment surplus increased on account of growing capital and financial inflows

The Executive, Legislature, and Judiciary continued to implement constitutional provisions, including devolution


RESULTS ACHIEVED Selected outputs and outcomes from the Bank’s portfolio during January-June 2013 During the first half of 2013, the Bank’s operations in Kenya have continued to improve the livelihoods of the population, notably through improved household incomes, women empowerment and support to the devolution process by capacity building initiatives in Counties. For instance, the small scale horticulture development project covering 8 Counties (Narok, Embu, Machakos, Nakuru, Kajiado, Loitokitok, Elgeyo-Marakwet, and Meru) has contributed to the rehabilitation of irrigation schemes leading to an increase in irrigated surface from 719 ha to 1403 ha in the project area. This translated for instance into a net increase in average incomes from Ksh 9,500 to Ksh 27,760 per month for 214 households in the Kabaa irrigation scheme which has been in full crop production since November 2011. Such increase is realized through the active participation of various social groups in the agriculture value chain (men and women at production, youth in marketing and transportation). Under the Community Empowerment and Institutional Support Project, 77 county and sub-county level planning offices have been constructed, ICT equipment have been procured for these offices, 100 staff of the Ministry of Devolution and Planning have been sponsored for Master’s degree programs and 600 women trained on leadership. Bank support has contributed to improved leadership skills for women, an increased awareness about devolved funds, an enhanced capacity of the Ministry of devolution and planning and increased effectiveness of county and sub-county planning officials in the implementation of the new devolved system. A detailed presentation of the results achieved by the Bank’s projects in Kenya during the first semester of 2013 is provided in Annex 1, Table A.2. Flagship Project: The Green Zone Development Support Project The Green Zone Development Support Project is an innovative project promoting forest regeneration and conservation for environmental protection while improving rural livelihoods and incomes of communities living adjacent to the forests and actively involved in the implementation. It was approved by the Boards in October 2005 with an ADF financing of UA 25.04 million and is planned to be completed by 30 June 2014. The project comprises four components: i) Natural Forest Conservation; ii) Buffer Belt Watershed Management; iii) Support to Forest Adjacent Communities; and iv) Project Coordination and Management. The project is part of the Government’s response to address environmental degradation which has direct negative impact on agricultural soils, sources of rural water supply, and plant and animal diversity that are important for sustaining life and the tourism industry of Kenya. It actively involves local communities and allows them to benefit from the sustainable use of forests. The project has empowered community households, especially women, through the promotion of

Protection for natural regeneration, Mt Kenya- 63,000 Ha protected in 17

counties

Key results:

Incomes of 214 households in 8 Counties increased from Ksh 9,500 to Ksh 27,760 per month

Irrigated surface increased from 719 ha to 1403 ha

77 county and sub-county level planning offices have been constructed, ICT equipment procured, 100 staff of the Ministry of Devolution and Planning been sponsored for Master’s degree programs, and 600 women were trained on leadership


income generating activities. It supports a total of 17,000 households, of which at least 6,800 (40%) are women, through mini-irrigation, provision of high value fruit trees and medicinal plants and apiculture. Support is also provided for strategic market identification, product development and establishment of linkages with processors for value addition. The project further supports training and sensitization on HIV/AIDS, mitigation of water-borne diseases, malaria, as well as gender in development process, to farmer groups, forest user associations, community leaders and elders. To achieve a maximum impact, households are organized into groups for each major activity. Marketing of tea at community level is being increased through the construction of 20 community tea collection centers. The project also supports sensitization workshops, technology transfer, study tours, and gender training to empower community members. Key results of the project during the period under review include: i) maintenance of 243 km of access roads resulting in enhanced forest management and conservation activities as well as facilitating farmers to transport their

farm produce to the markets and farm inputs to their farms; ii) consolidation and maintenance of 750 ha of tea and 1000 ha of assorted tree species as well as maintenance and protection of 12000 ha of rehabilitated forest sites thus creating a continuous buffer boundary between communities and forest thus protecting the forest from encroachment. This activity has also generated sustainable employment opportunities for peri-forest communities, notably for the youth and women; and iii) increased incomes per household to the tune of Ksh. 36,000/month, thereby improving the livelihoods of peri-forest communities. The increased incomes have enabled the latter to purchase their own pieces of land outside the forest area, construct permanent

shelters, provide quality education to their children and afford high nutritional food such as fish, milk, fruits, among others to their families.


RWANDA


Q1 2013 Q2 2013

Real GDP growth (%) 5.9 - Inflation rate (CPI, %) 4.6 3.7 Fiscal balance - - Total expenditure 2,385 (FY2012/13) 2,544 (FY2013/14)

Capital - - Total revenue 271.5 271.6

Tax revenue 268.6 269.8 Grants 680 (FY2012/13) 724 (FY2013/14)

External current account balance (812) (2012) (845) (2013) Imports 515.9 619.7 Exports 140.9 159.8

Exchange rate (USD / RWF) 633.2 639.7 International reserves (in months of imports) 4.8 (2012) 3.8 (2013) Total public debt (stock) 1,597 (2011) 1,652 (2012)

External 1,135 (2011) 1,171 (2012) Domestic 462 (2011) 481 (2012)

*All figures in million US Dollars unless indicated otherwise Source: National Authorities and author computations Economic Performance Economic activity slowed down in the first quarter of 2013, with real GDP growth declining from 8.8% in the 4th quarter of 2012 to 5.9%. The composite index of economic activities for the year ended June 2013 also increased moderately by 12.25% compared to 18.7% achieved in March 2013. The slowdown in economic activity was largely due to the impact of tight monetary and fiscal policies implemented during the second half of 2012 and also in first quarter of 2013 to accommodate the cut backs in aid. In particular, the delayed budget support disbursements constrained government spending on both the social and productive sectors which limited growth in the country’s productive capacity. In addition, the government’s use of the overdraft facility at the central bank and treasury bills to bridge the funding gap resulting from the aid cut-backs crowded-

HIGHLIGHTS

Real GDP growth was moderate on account of tight monetary and fiscal policy in the aftermath of the aid-cuts experienced in 2012

Resumption in budget support disbursements and the successful issue of the country’s first sovereign bond are expected to contribute to the achievement of the 7.5% GDP growth target for 2013


out private sector borrowing. The resumption of budget support disbursements and the successful issue of the country’s first sovereign bond in Q1 and Q2 2013, respectively, are expected to support the implementation of the government’s strategic investment programs and contribute to the achievement of the 7.5% GDP growth target for 2013. Fiscal Policy and Public Debt

The fiscal policy stance pursued by the government during the quarter under review remained anchored on its fiscal consolidation strategy (FCS). The FCS aims at increasing domestic revenue mobilization, prioritizing public spending, and minimizing the level of domestic borrowing used to finance the budget. In line with the FCS, domestic revenue collections amounting to USD 271.6 million in Q2 2013 were 1.5% higher than the USD 267.7 million outturn achieved during the previous quarter. This increase in tax receipts was due to improved performance of taxes on goods and services and income which jointly accounted for 93% of the total tax revenues for the quarter under review. The total revenue outturn for FY 2012/13 was USD 1,015 million, which is 1% higher than the target. The USD 2.544 billion FY 2013/14 budget was presented to Parliament in June 2013 and its core objectives reflect the government’s FCS and the second Economic Development and Poverty Reduction Strategy (EDPRS-2) that was adopted in April 2012. In particular, the FY 2013/14 budget prioritizes accelerating shared growth within a sustainable macroeconomic framework with real GDP growth of 7.5% in 2013 and 2014. In line with these objectives; the share of the budget financed by domestic revenues is projected to increase to 51% (15.6% of GDP) up from an estimated 45.6% (14.9% of GDP) in FY 2012/13. Targeted interventions have been programmed to ensure that GDP growth is inclusive and pro-poor especially in agriculture, skills development and entrepreneurship and enterprise development. During the quarter under review, the government successfully issued the country’s first sovereign bond, a Eurobond amounting to USD 400 million, which was oversubscribed by over 600%. The bond proceeds will be used to repay current public sector loans that were acquired at higher interest rates (USD 200 million), finance the completion of the government strategic investments including the Kigali Convention Center (USD 150 million) and the 28 MW Nyaborongo hydro-power plant (USD 50 million) to promote conference tourism and address energy bottlenecks respectively. Monetary Policy and Financial Sector Monetary policy during the quarter under review was driven by the central bank’s objective of maintaining low and stable inflation while supporting judicious growth in private sector credit. Consequently, and on the back of receding inflationary pressures, the central bank reduced its key policy rate (Key Repo Rate, KRR) to 7% in June 2013 from the 7.5% held since June 2012. As a result of the prudent monetary policy stance, receding inflation from the EAC region and good food harvests headline inflation declined from 4.4% for the year ended April 2013 to 3.7% in June 2013 with core inflation declining from 5.2% to 3.4% during the same period. Short-term liquidity continued to improve in the banking system following the resumption in budget support disbursements in Q1 2013, accumulation of government deposits driven by the Eurobond proceeds and the consequent reduction in government borrowing from the domestic financial sector. These

Fiscal consolidation to increase domestic revenue mobilization and prioritize public spending remained the key strategic thrust of fiscal policy

The USD 2.5 billion FY 2013/14 budget was presented to Parliament in June 2013, focusing on shared growth and macroeconomic stability

The Central Bank’s key policy rate was reduced to 7% in June 2013 from 7.5% held since June 2012


developments contributed to a reduction in money market rates. The weighted average T-bill rate declined from 12.2% in March 2013 to 10.8% in June while the inter-bank rate decreased from 10% to 9.6% during the same period. However, the banking sector depicted a lagged response to the increased liquidity with lending rates increasing from 17.2% to 17.7% between March and June 2013 while the average deposit rate increased from 10.4% to 10.6% during the same period. Bank loans to the private sector increased by 26% to USD 189 million between first and second quarters of 2013, with the bulk of this credit going to commerce and hotels (48%) and the mortgage industry (19.8%). External Sector Export earnings increased by 23% to USD 159.8 million between Q1 and Q2 2013 driven mostly by mineral exports particularly coltan, which increased by 84% to USD 44.7 million compared to Q1 2013 and accounted for 28% of the total export receipts. The increase in coltan receipts was largely driven by good international prices and increased production. Coffee and tea export earnings decreased by 17% to USD 23.6 million between Q1 and Q2 following a decline in prices for these two commodities. Imports increased by 20% from USD 515.5 million to USD 619.7 million during the same period, with imports of consumer goods accounting for 35% of the total import bill in Q2 2013, followed by capital goods (26%) and intermediate goods (26%). The trade deficit consequently increased by 19% to USD 459.9 million in Q2 2013 up from USD 385.4 million in the preceding quarter. For 2013, export earnings are projected to increase to USD 650.7 million from USD 590.8 million in 2012, driven by higher earnings from minerals, tea and non-traditional exports particularly processed food products. Imports are projected to increase from USD 1,967 million to USD 2,142.2 million during the same period due to higher demand for capital and intermediate goods to support strategic investments. The Rwandan Franc remained stable during the first half of 2013, depreciating by 1.8% against the US Dollar compared to the 1.1% depreciation recorded during the same period in 2012 and 4.5% for the whole year 2012. However, the Franc appreciated by 5% against the British Pound and depreciated by 1.2% against the Euro. The relative stability of the Franc unit against the US Dollar and other major currencies was in part due the resumption in budget support disbursements and the Eurobond proceeds.

OTHER NOTABLE DEVELOPMENTS AND UPDATES Country Strategic Framework Cabinet adopted the second Economic Development and Poverty Reduction strategy (EDPRS-2, 2013-2018) in April 2013. The objective of EDPRS-2 is to contribute to the 2020 vision of middle income status through accelerated real GDP growth averaging 11.5% and reducing poverty levels from the current 44.9% to less than 30%. The strategy focuses on four thematic areas: Economic Transformation, Rural Development, Productivity and Youth Employment and Accountable Governance. EDPRS-2 places a strong focus on private sector led growth, increasing exports, urbanization and rural development, enhancing agriculture productivity, creating jobs especially for the youth, and improving efficiency in service delivery in both public and private sectors. The strategy aims to consolidate the gains from EDPRS-1

Strong growth in export receipts, driven by mineral exports, was insufficient to reduce the trade deficit given increased imports

Resumption in budget support disbursements and proceeds from the Eurobond contributed to the relative stability of the local currency against the US Dollar

The second Economic Development and Poverty Reduction Strategy (2013-2018) was adopted in April 2013, aiming to steer the country towards middle income status by 2020


(2008-2012) during which period real GDP growth averaged over 8% per year and poverty declined from 56.7% in 2005/06 to 44.9% in 2010/11. Private Sector Activity The Rwanda Development Board (RDB) registered investment projects worth USD 1.2 billion during the first half of 2013, representing 96.4% of its annual target and exceeding the USD 1.1 billion of total investments registered in 2012. The top two registered investments are jointly valued at USD 618 million and comprise Korea Telecom, which plans to deploy 4G Long Term Evolution (LTE) broadband networks across the country, and Turkish based Hakan Mining LTD, which plans to generate 100 MW of electricity from peat to energy. With an estimated average conversion rate (from registration to actual investments) of 75%, the registered investments are projected to yield at least US 940 million in actual investments and create over 3,000 jobs. Donor Relations The Executive Board of the IMF completed the 6th review under the three-year Policy Support Instrument (PSI) and extended the PSI to end-January 2014 during which period a new PSI will be negotiated. The IMF review concluded that in spite of the external shocks related to delays in the disbursement of programmed budget support, the economy remained resilient on the back of strong growth in services and construction sectors. The review underscored that pro-active and prudent policy responses to external shocks including the postponement of some spending to the first half of 2013, maintaining tight monetary policy to reduce inflationary pressures, and using part of the foreign exchange reserves to ensure a stable exchange rate helped to preserve macroeconomic stability. The review also noted that the 2013 economic outlook remains favorable on account of the resumption of budget support disbursements and the projected strong performance in the agriculture and industry sectors.

RESULTS ACHIEVED Selected outputs and outcomes from the Bank’s portfolio during January-June 2013 The Bank’s investments in Rwanda have generated important development results during the first half of 2013. For instance, the Rural Water and Sanitation project has funded the construction of 8 water supply systems spanning 185km which enabled over 174,000 people to benefit from new or improved access to water. The average distance travelled to collect water has consequently reduced from 2km to 500m, thus reducing the average travel time to the nearest water point from 1 hour to less than 10 minutes. Support to human development has allowed 190 female students across three national universities to benefit from full scholarships in science and technology for academic year 2013. This contributed to a 98% retention rate for female students pursuing higher education in science and technology in the three beneficiary national universities. The Bugesera multinational agriculture project funded the distribution of over 400 cows elevating an equivalent number of households from poverty. Completion of the upgrading of 50km along the Nyamitanga-Ruhwa-Ntendezi-Mwityazo multinational road increased all-weather road accessibility reducing vehicle

The IMF successfully completed the 6th review under the PSI and extended the current PSI to end-January 2014

Key results:

Reduction in the average travel time to the nearest water point from 1 hour to less than 10 minutes for 174,000 people

A 98% retention rate for female students in science and technology in three beneficiary universities

Over 400 families across the country elevated from poverty


operating costs and doubling the average monthly household incomes to USD 120 in the project region. A detailed presentation of the results achieved by the Bank’s projects in Rwanda during the first half of 2013 is provided in Annex 1, Table A.3. Featured project: Competitiveness and Enterprise Development Project - Phase II (CEDP-II) Approved by the Boards of Directors in December 2008, the UA 5 million grant CEDP-II’s development objective is to contribute to enterprise development and competitiveness in Rwanda. The project, which is scheduled to close on 31st December 2013, has 3 components: (i) support to the Rwanda Development Board (RDB), in particular the operationalization of the Strategic Investment Promotion and Enterprise Development programs; (ii) support to the Central Bank in the area of improving access to credit and financial information, strengthening banking supervision and preparation for Basle II; and (iii) support to the Hanga Umurimo (job creation) Program implemented under the Ministry of Trade and Industry – whose primary goal is to nurture a national entrepreneurial culture and thus contribute to the creation of the target 3.2 million off-farm jobs in Rwanda by 2020. The CEDP-II, in particular the Hanga Umurimo (HU) program, has generated valuable results during the period under review and contributed to a marked improvement in the livelihoods of several Rwandans. Key outputs and outcomes generated by the project during the first half of 2013 include: o About 300 SMES were coached/mentored, of which 221 have been facilitated to obtain credit guarantees from the

Business Development Fund; o 118 SMEs have used these credit guarantees to access funding from commercial banks. 58 of these SMEs are

female owned businesses; and o 1,103 new jobs were created by the SMEs that accessed credit through the HU program. The HU program’s approach is to offer an SME support package to selected enterprises to facilitate innovation, risk-taking, business incubation, growth and expansion. This package comprises (i) training on core business competencies such as business planning and management; technical advice, coaching and mentoring to guide

entrepreneurs through the formative business stages; and working with Business Development Fund (BDF), a semi-autonomous financial institution, to provide credit guarantees of up to 75% of the loan amount to selected SMEs. The target beneficiaries include start-up SMEs and SMEs that have been in operation for less than 3 years and which are yet to benefit from bank finance. Since the start of the HU program in 2011, 3,900 entrepreneurs have been trained, out of which 1,678 business plans have been forwarded to financial institutions for funding. A total of 143 SMEs1, of which 60 SMEs are owned by women, have received funding amounting to Rwf 1.8 billion (USD 2.8 million) resulting in the creation of over 1,500 jobs. The SMEs receiving funding represent a diverse sectoral distribution including agro-processing, manufacturing, services and mining.

1 It is important to note that access to credit is just one of the components of the HU Program. In particular, SMEs that participate in the program are able to utilize the acquired business skills to expand and grow their business even in cases where funding is not accessed directly through the HU Program.

Sectoral Distribution of SMEs receiving funding

under the HU Program


SEYCHELLES


Q1 2013 Q2 2013

Real GDP growth (%) - - Inflation rate (CPI, %) 6.2 4.2 Fiscal balance - - Total expenditure 86.2 104

Capital 9.71 16.19 Total revenue 84.94 125

Tax revenue 72.18 111.71 Grants 5.63 1.48

External current account balance - - Imports 0.249 0.2 Exports 0.105 0.064

Exchange rate (USD / SCR) 12.41 11.78 International reserves (in months of imports) 2.9 3.1 Total public debt (stock) 889 877

External 460 456 Domestic 429 420

*All figures in million US Dollars unless indicated otherwise Source: National Authorities (draft monthly reviews April to June 2013) and author computations Economic Performance The tourism sector continued to be the key driver of growth in Seychelles. The sector experienced a 15% growth in the first half of the year, as arrivals reached 112,509. The growth was attributed largely to a rebound in the tourist arrivals from Europe, its main traditional market, which had in the previous year suffered the effects of a financial crisis. Visitors from Europe accounted for 72% of arrivals since the beginning of the year. Tourist arrivals for the period April-June 2013 stood at 53,429 compared to 48,836 the same period last year, representing an 8.6% increase. The fishing sector - the main export earner (fish processing) – also experienced growth during the first half of the year, i.e. by 16% compared to the same period in 2012. The export figures for the months of April and May 2013 were

HIGHLIGHTS

The tourism sector continued to drive growth on the back of a rebound in tourist arrivals from Europe, the country’s primary market


SCR 701,609 (USD 0.59 million) compared to SCR 696,333 (USD 0.49 million) during the same period last year. Given the positive performance of the tourism industry and auxiliary sectors during the first half of the year, real GDP growth is projected to increase from 2.9% in 2012 to 3.3% in 2013. Fiscal Policy and Public Debt The Government continued to implement prudent fiscal policies consistent with its debt reduction objective, which is to reduce public debt to 50% of GDP by 2018. Public debt recorded in May 2013 stood at 69% of GDP, with external debt at 35.8% of GDP and domestic debt at 33.2% of GDP. In addition, fiscal consolidation in order to attain a primary budget surplus of 5.6% of GDP in 2013 continued to be pursued in the second quarter of the year. The government attained a primary surplus of 2.1% for the quarter under review (against a budgeted 1.8%) and an overall primary surplus of 3.6% for the first half of the year against a budgeted 2.7% for the period. These positive results were driven by expenditure savings, which at SCR 1.227 billion (USD 106 million) were below mid-year target. Total revenue during the second quarter was SCR 1.42 billion (USD 125 million) with VAT being the main tax contributor at SCR 394 million (USD 33.5 million). Tax revenue for the quarter was 9% over the budgeted figure, while overall performance at mid- year was 4% below target. The budget outlook for 2013 suggests that tax revenue will grow by 7% over 2012 figures. Tax revenues are expected to amount to US$410m in 2013 or 32.7% of GDP compared to 32.3% of GDP in 2012. Non-tax figures which continued to underperform, were estimated at SCR 156 million (USD 13.3 million) during the second quarter of 2013. Grants at USD 1.5 million for the quarter under review were 82% below target. For the first half of 2013, grants at USD 5.65 million were 77% below target. Monetary Policy and Financial Sector Monetary policy was guided by the central bank’s reserve money target framework. The reserve money ceiling for the second quarter was increased by SCR 50 million (USD 4.26 million) to SCR 1,980 million (USD 168.8 million) between the first and second quarters in line with the projected reduction in domestic inflationary pressures. Year-on-year inflation declined from 6.2% in the first quarter of 2013 to 4.2% in the second quarter, despite a slight increase in food prices following an 8% increase in prices for fish products during the review period. The low inflation was underpinned by the low CPI rates of non-food items, particularly transport costs which declined by 2%. The 12 month average headline inflation reduced to 6.2% in June 2013 compared to 7.2% at end of March. As a result of the increase in liquidity, lending rates continued to decrease, from 13.25% in February 2013 to 12.30% in May 2013. With regard to foreign exchange movements, the Seychelles Rupee (SCR) saw its first monthly depreciation of the year in May, as the rupee depreciated against the Euro (to trade at 15.32 compared to 15.22 in April) and US dollar (to trade at 11.78 from 11.71 in April). Over the quarter, the SCR depreciated by 0.8% against the US dollar and 2.5% against the Euro. External Sector Seychelles trade deficit increased to SCR 1.244 million (USD 0.1 million) in the second quarter of 2013 from SCR 1.18 million (USD 0.09 million) during the first quarter of the year. This was largely due to the slight depreciation the currency faced during the same period. As a result exports and imports were significantly

Prudent fiscal policies focused on reducing the public debt to GDP ratio to 50% in 2018, down from the current 69% of GDP

Monetary policy was eased due to a reduced inflationary pressures

The trade deficit increased due to the depreciation of the local currency against the US Dollar and the Euro


limited during the period as evidenced by the decline in mineral fuels (the largest import), which accounted for 20% of imports down from 27% in Q1 2013. The current account balance is projected post a deficit of USD 211 million in 2013, down from USD 231 million deficit in 2012. This could be mitigated by an increase in exports, driven by fish products (the most important export item), which have experienced a 16% increase in value between January-May 2013, compared to the same period last year. Gross international reserves in the second quarter of 2013 stood at USD 343 million, averaging 3.1 months of import cover, and increasing from the first quarter position of USD 315 million and 2.9 months of import cover.

OTHER NOTABLE DEVELOPMENTS AND UPDATES Donor Relations On May 8th 2013, the International Monetary Fund (IMF) Executive Board completed the 7th review under the Extended Fund Facility (EFF) and approved a USD 5 million disbursement. The Board noted the governments’ commitment to macroeconomic stability. The IMF observed that while the outlook was benign, the economy remained vulnerable to the global environment. The IMF encouraged the Government to increase efforts to further improve public financial management, strengthen oversight of parastatals, and increase reserve coverage as a buffer against shocks. In addition the IMF recommended increasing access to credit, enhancing infrastructure, addressing data weaknesses and reducing skills mismatch. The European Union and the government initiated discussions on a new protocol to the EU-Seychelles Fisheries Partnership Agreement (FPA) in May 2013. The new 6 year protocol will extend the EU fishing activities in the Seychelles at the expiration of the current protocol in January 2014. The EU-Seychelles FPA, which is the most extensive fishing agreement amongst countries in the Indian Ocean, allows access for EU vessels to the Seychellois waters in return for Euro 30.6 million to be used in supporting the national fisheries policy over a period of 6 years.

RESULTS ACHIEVED Selected outputs and outcomes from the Bank’s portfolio during January-June 2013 The Bank’s currently active portfolio in Seychelles comprises 6 operations (approved and/or on-going) including 2 projects, 2 studies, 1 Policy Based Partial Credit Guarantee Program (PBPCGP), and 1 emergency relief assistance. The Bank’s investments in Seychelles have contributed towards supporting macroeconomic stability and bridging the ICT gap (access and price) during the first half of 2013. The PBPCGP has contributed to a reduction in the country’s public debt to more sustainable levels of 69% of GDP in 2013. Support to ICT development has led to an increase in household penetration rates and a 74% reduction in the monthly cost of bandwidth between 2010 and June 2013.

In May 2013 the IMF completed the 7th review under the EFF and approved a USD 5 million disbursement

The EU and the Government initiated discussions on a new Fisheries Partnership Agreement that will provide financial support to the fisheries sector

Key results from the Bank’s support included a reduction in public debt levels, reduction in the cost of bandwidth and an increase in household ICT penetration rates

Key results:

The cost of Internet access decreased from USD 50/month in 2010 to USD 13/month as at June 2013


A detailed presentation of the results achieved by the Bank’s projects in Seychelles during the first semester of 2013 is provided in Annex 1, Table A.4. Flagship Project: Policy Based Partial Credit Guarantee Program (PBPCGP) Approved by the Boards of Directors in December 2009 for a period of 16 years, the UA 6.4 million PBPCG’s development objective is to facilitate commercial debt restructuring whilst reinforcing financial governance. In line with its objectives, the PBPCGP has supported the government’s efforts to promote macroeconomic stability and sustainable growth, by reducing public debt to a more sustainable level. Since the approval of the PBPCG in 2009, public debt levels have reduced from 98% of GDP in 2009 to 77 % of GDP at end-2012. In June 2013, the debt to GDP ratio had reduced further to an estimated at 69% (35.87% external and 33% domestic). The country’s medium term debt objective is to achieve 50% public debt to GDP by 2018. The PBPCG is an undertaking by the AfDB to pay up to USD 10 million in interest payments of the New Discount Bonds that will be offered to investors during the Seychelles exchange offer. This instrument is a 16 year rolling non re-instatable guarantee. A rolling guarantee is such that if a guarantee is not called it is “rolled over” to the next guarantee payment date until the guarantee agreement expires. Therefore, if the Trustee (Government of Seychelles) does not call on the guarantee to pay the interest due on any given interest payment date, the guarantee will be passed on to the subsequent due date. This will occur for as long as no disbursement occurs and until the Guarantee Termination date (16 years). If, at any point in time, a disbursement is made on a portion of the guarantee amount, at the next interest payment date, only the unpaid guarantee amount (referred to as the relevant amount) can be called. This process will be repeated for as long as any portion of the guarantee maximum amount remains unspent. The approval of the PBPCG by the AfDB was the first time that a development finance institution (DFI) offered a partial credit guarantee under the framework of debt re-structuring. Sovereign partial credit guarantees had previously been offered by DFIs to primarily facilitate the access of countries to capital markets. Debt restructuring stands out as one of the most remarkable reforms undertaken by the country since 2008. As a result of the AfDB’s support, the country has made tremendous steps towards attaining debt sustainability and achieving macroeconomic stability.

Public debt decreased from 98% of GDP in 2009 to 77% in 2012 and further to 69% in June 2013


TANZANIA


Q1 2013 Q2 2013

Real GDP growth (%) - - Inflation rate (CPI, %) 9.8 7.6 Fiscal balance (% of GDP) - (5.8) Total expenditure - 8,500

Capital - 2,500 Total revenue - 5,300

Tax revenue - - Grants - -

External current account balance (4,000) (4,173) Imports 13,000 12,903 Exports 9,000 8,283

Exchange rate (USD / TZS) 1,593 1,604 International reserves (in months of imports) 3.8 4.3 Total public debt (stock) 14,460 15,606

External 11,161 12,089 Domestic 3,299 3,517

*All figures in million US Dollars unless indicated otherwise Source: National Authorities and author computations Economic Performance After recording annual growth of 6.9% in 2012, the Tanzanian economy is expected to sustain the growth momentum in 2013, following the stabilization of the energy sector which previously was a major source of macroeconomic instability, and favorable weather conditions experienced during the first half of 2013. The normalization in power generation has been vital for industrial production, while good weather, coupled with the timely supply of subsidized inputs has been key in supporting growth in the agriculture sector. Also, growth continues to be supported by public investment in infrastructure, as well as expansion in services and trade.

HIGHLIGHTS

The stabilization of the energy sector and increased productivity in the agriculture sector are expected to sustain Tanzania’s growth momentum in 2013


Fiscal Policy and Public Debt Cumulative domestic revenue collections at end-June 2013 were estimated at TZS 8.5 trillion (about USD 5.3 billion), equivalent to about 97% of the target for fiscal year (FY) 2012/13. Based on the preliminary estimates, cumulative tax revenue collections amounted to TZS 7.79 trillion (USD 4.9 billion), equivalent to about 97% of the target for the FY. Overall domestic revenue collection reached 17.7% of GDP for FY 2012/13, slightly less than the programmed 18% of GDP, but marginally higher than the 17.1% of GDP collected in FY 2011/12. Good revenue performance was a result of the administrative measures adopted by the Tanzania Revenue Authority, including intensified tax audits, implementation of electronic fiscal device enforcement programs and recovery of tax arrears. Cumulative Government expenditure amounted to TZS 14.3 trillion (USD 8.9 billion) by June 2013, equivalent to 94% of the budget estimates for FY 2012/13. Recurrent expenditure amounted to TZS 10.3 trillion (USD 6.4 billion), while development expenditure was TZS 4 trillion (USD 2.5 billion) – equivalent to 96% and 87% of the estimates, respectively. Execution of the development budget was low partly because of low outturn of donor funding for development projects during the year. In mid-June, the Government unveiled a TZS 18.2 trillion (USD 11.4 billion) budget for FY 2013/14, about 20% higher than the TZS 15.2 trillion (USD 9.5) of the previous budget. About 69% of the budgeted resources are planned to be allocated to recurrent expenditure and 31% for development expenditure. The overall budgeted expenditure is about 33% of GDP, slightly higher than the 31.4% of GDP recorded in FY 2012/13. Domestic revenues are projected to increase from an estimated 17.7% of GDP in FY 2012/13 to 20.2% of GDP in FY 2013/14. The government outlined several revenue enhancing measures, including the widening of the revenue base by identifying new sources and improving tax administration efficiency. The FY 2013/14 budget aims to achieve a GDP growth of 7% in 2013, while maintaining single digit inflation. To support these objectives, the FY 2013/14 budget identifies several priorities including: agriculture, industry, energy, education, transport, and water. The overall budget deficit is projected at 5% of GDP, down from an estimated 5.8% of GDP in FY 2012/13. Tanzania’s external debt stock stood at USD 12.1 billion at the end-June 2013 (42% of GDP), representing a 17% increase over the USD 10.4 billion recorded during the corresponding period in the previous year. Due to the ongoing financing challenges in the energy sector, as well as sizeable infrastructure financing needs, the level of non-concessional borrowing has increased, estimated at around 8% of GDP from less than 5% of GDP in the previous FY. Hence, a sound debt management strategy, rationalization of non-concessional borrowing, and improving public investment planning capacities remain critical to ensuring debt and fiscal sustainability. Monetary Policy and Financial Sector The monetary policy stance remained tight during the quarter under review, with money supply growing at around 17.6% in May 2013, slightly below the 18% growth target. The Bank of Tanzania maintained its key policy rate at 12%. The spread between overall lending interest rates (averaging 15.6%) and deposit rates (averaging 3.06%) has remained wide partly because of perceived high credit risk and inadequate competition in the financial sector. Also, the problem of wide

Domestic revenue collection was in line with the target, mainly due to improved tax administration efficiency

The FY 2013/14 budget prioritizes infrastructure development and human development

Improved food harvests and prudent monetary policy contributed to a reduction in headline inflation


interest rate spread is exacerbated by low financial penetration, with formal financial institutions (banks and insurance) covering only 18% of urban population and 5% of rural population, while 33% and 34% of rural and urban population respectively remain completely excluded. Credit to the private sector increased by 17.1% at end-June 2013, which is below the target of 20% for the period. Improved food harvests following favorable weather conditions, stability in power generation, and a prudent monetary policy have helped ease inflationary pressures, with annual headline inflation falling consistently from 9.8% for the year ended March 2013 to 7.6% in June 2013. The Tanzanian Shilling remained stable during the quarter under review, with the shilling depreciating by 0.8% against the US Dollar. External Sector Exports reached USD 8.3 billion at the end-June 2013, representing a 3% increase over the USD 8.1 billion recorded for the same period of the previous year. Gold exports, which amounted to about USD 1.84 billion, continued to dominate the export earnings, followed by travel receipts largely from tourist arrivals, and manufactured exports. Imports of goods and services amounted to USD 12.7 billion, which translates into a 2% decline from the USD 12.9 billion recorded during the corresponding period in 2012. Oil continued to drive imports, accounting for about 37.4% of total goods imports, largely on account of the increase in domestic demand for oil for thermal power generation. With these developments, the current account deficit narrowed slightly to USD 4.17 billion from USD 4.26 billion recorded in the corresponding period in 2012. The overall balance of payments recorded a surplus of USD 449.1 million, more than double the surplus of USD 209.1 million recorded at end-June 2012 due to net inflows recorded in capital and financial accounts. Gross official reserves amounted to USD 4.35 billion, equivalent to import cover of 4.3 months.

OTHER NOTABLE DEVELOPMENTS AND UPDATES Political Developments The Constitutional Review Commission (CRC) in June 2013 unveiled the draft new constitution. The Draft points to significant changes in the structure of the union between Mainland Tanzania and Zanzibar for instance, by proposing a federal system with three Governments: the Union Government, the Government of Mainland Tanzania, and the Government of Zanzibar. Among other things, the new constitution aims to considerably scale down the powers of the President, for instance by requiring parliamentary approval for the nomination of civil servants. Other provisions include: the formation of an independent electoral commission; allowing candidates without political party membership to stand for elective positions; and barring career politicians from becoming ministers. Two intensive rounds of review will precede the adoption and ratification of the new constitution, which is planned for April 2014 ahead of the 2015 general election.

Increased exports earnings, notably from gold exports and tourism, resulted in a slight improvement of the current account deficit

A new draft constitution was unveiled in June 2013, which proposes landmark changes in the structure of the Union between the mainland and Zanzibar


Donor Relations In June 2013, the IMF Executive Board completed the 6th and final review of Tanzania’s performance under the Policy Support Instrument (PSI) and the second review under the Standby Credit Facility (SCF) arrangement. The review noted the continued robust growth of the economy and the decline in inflation, and commended the Government for its commitment to contain demand pressures, strengthening macroeconomic stability, and preserving a sound fiscal position. Key reform priorities identified in the review include to step-up structural reforms, particularly to modernize the tax regime; strengthening debt management capacity; and establishing a sound institutional and legal framework to ensure that possible future revenues from newly discovered gas deposits benefit all the citizens. The authorities are considering requesting for a new PSI to commence in January 2014.

RESULTS ACHIEVED Selected outputs and outcomes from the Bank’s portfolio during January-June 2013 There are noticeable achievements from the Bank’s support to Tanzania during the first semester of 2013. In particular, the upgrading of over 512.2 km of roads was completed including works on the the Singida–Babati-Mijingu Road Upgrading(223.5 km) and Arusha-Namanga-Athi River Road (240 km). The District Agriculture Sector Investment Program has had positive impacts with 11,375 participating farmers groups formed and trained, 47% of whom were female. In addition, over 2,800 micro-projects were funded and implemented. Over 200,000 new jobs were created by the Small Entrepreneurs Loan Facility II project with 50% of these jobs going to women. The portfolio at risk for financial intermediaries supported under the same project reduced from 7% to 5%. A detailed presentation of the results achieved by the Bank’s projects in Tanzania during the first semester of 2013 is provided in Annex 1, Table A.5. Flagship Project: Small Entrepreneurial Loan Facility Phase II (SELF-II) The UA 6.20 million SELF-II project was approved in May 2010 and is expected to be completed by December 2015. Its objective is to improve access to financial services for 820,000 small entrepreneurs in all districts of mainland Tanzania and Zanzibar. SELF-II is the Bank’s flagship project in Tanzania for the period under review due to its contribution to socio-economic transformation in rural and peri-urban areas across the country. To-date, the project has on-lent funds to 361 Microfinance Institutions (MFIs), 225 (62%) of which are rural based. An estimated 93,364 entrepreneurs/ borrowers have benefited from loans from SELF-II since the project started and 57% of the beneficiaries are women. Of the loan recipients, 80,791 are from rural and peri-urban areas and 30% are youths aged 35 years and below. An additional 361 loans have been delivered to financial intermediaries for on-lending to small-and-medium enterprises. SELF-II has also delivered capacity development to the MFIs and borrowers with 4,532 small entrepreneurs and 1,042 MFI staff trained in various business competencies and entrepreneurial skills including business planning and management as well as wealth creation. The financial and capacity development support provided by SELF-II has contributed to the creation of over 200,000 jobs.

The 6th and final review under the IMF PSI was successfully completed

Key results:

Over 500 km of roads were up-graded

Microcredit was provided to 93,364 small entrepreneurs, creating over 200,000 new jobs

11,375 farmer’s groups were trained, and over 2,800 micro-projects funded and implemented


UGANDA


Q1 2013 Q2 2013

Real GDP growth (%) 3.3 - Inflation rate (CPI, %)) 4.1 3.5% Fiscal balance (162.8) Total expenditure 910.6 -

Capital - - Total revenue 732.9 -

Tax revenue 674.6 Grants 61.5

External current account balance (77) - Imports 437.6 1,028.05** Exports 291 502.42**

Exchange rate (USD / UGX) 2,660.0 2,585.7 International reserves (in months of imports) 4.4 4.4 Total public debt (stock) - -

External - - Domestic - -

*All figures in million US Dollars unless indicated otherwise Source: National Authorities and author computations, **April and May figures only Economic Performance The Ugandan economy sustained the growth recovery momentum posting a 5.1% real GDP growth during FY 2012/13, which although slightly below the projected target of 5.4%, was higher than the 3.4% for FY 2011/12. Growth was driven by: recovery in the construction subsector (8.2% compared to 3.2% last year); transport and communication (10.4%); manufacturing (4.2% compared to -0.3% in the previous year); and the real estate’s activities which remained unchanged at 5.8%. Overall, the main driver of the economic recovery was the industrial sector which comprises approximately 25% of GDP in 2012/13 posting a 6.8% growth rate (up from 2.5% last year) supported by the return of an improved stable energy supply (with Bujagali

HIGHLIGHTS

Real GDP grew by 5.1% in FY 2012/13 mainly driven by the industry and service sectors


coming on grid making the electricity sector to grow by 10%) hence significantly improving the performance of the manufacturing (4.2%) and construction (8.2%) sub-sectors. The services sector which accounts for 52% of GDP grew by 4.8% (from 3.6%), while the agricultural sector which employs 66% of the population and constitutes 14% of GDP continued to grow sluggishly during FY 2012/13 only posting a 1.4% growth, a significant improvement compared to the 0.8% achieved in FY 2011/12 due to the largely subsistent nature of the country’s agriculture sector. Although the official growth figures for the second quarter of 2013 are yet to be released, the continued favorable weather conditions and stable energy situation are the key growth drivers. In the short term, growth is expected to be driven by trade supported by a positive regional economic outlook, tourism, manufacturing, construction and services to achieve a real GDP growth of 6% in 2014. Fiscal Policy and Public Debt By end of June 2013, the cumulative domestic revenues from tax and non-tax revenue was UGX 7,154.60 billion (USD 2,730.76 million) against a target of UGX 7,284.7 billion, representing a shortfall of UGX 130.1 billion, yielding a 98% of total domestic revenue performance. Domestic revenue was 13.5% of GDP compared to a target of 13.7%, however in comparison to the revenue collection at June 2012; this represents a 16.6% growth in nominal terms. On one hand, the shortfall in revenue collection was due to the reduction in import volumes of fuel and non-tariff barriers imposed by the Kenya Ports Authority particularly the introduction of cash bonds imposed on the goods transiting through Kenya. On the other hand, the continued good revenue performance is a result of improvements in tax administration efficiency including: increased tax audits for domestic taxes, the roll out of the electronic customs software ‘ASYCUDA World’ platform across the country, and leveraging the Integrated Finance Management System to expand the tax base. Cumulative Government expenditure and net lending for FY 2012/13 amounted to UGX 10,479.2 billion by June 2013, equivalent to 96.9% of the budget estimates or 19.2% of GDP compared to 18.6% of GDP in FY 2011/12. Recurrent expenditure was UGX 5,867.4 billion while development expenditure amounted to UGX 4,163.9 billion, equivalent to 104% and 78.6% of the estimates, respectively. The low performance of the development budget is partly explained by the suspension of budget support of UGX 294 billion in November 2012. The overall fiscal deficit excluding grants for 2012/13 is estimated at UGX 3,122 billion compared and below the programmed UGX 3,470.7 billion. The total public debt stock stood at UGX 15,939.1 billion (USD 608,362 million or 29.1% of GDP) by June 2013, representing a 3 percentage point increase from 27.8% of GDP at the end of June 2012. Of this, UGX 6,045.8bn (11.1% of GDP) is domestic debt) while UGX 9,893.3bn or 18.1% of GDP is external debt. The recent Debt Sustainability Analysis conducted in October 2012, public and public guaranteed debt was assessed to be sustainable with all the five debt-burden indicators below the debt sustainability thresholds. Monetary Policy and Financial Sector The Monetary Policy objectives for the quarter under review focused on maintaining macroeconomic stability and improvements in resource mobilization and utilization, while maintaining sufficient level of foreign exchange reserves to

Domestic revenue collection increased to 13.5% of GDP due to improvements in tax revenue administration efficiency

The monetary policy stance pursued in Q2 was aimed at maintaining macroeconomic stability while supporting the economic recovery

Improved food production, stable energy supply, and prudent monetary policy contributed to a reduction in inflation


mitigate shocks and inflation within single digits and below the 5% targets. The central bank continued to implement accommodative monetary policy in Q2 2013, reducing the central bank rate (CBR) from an average of 12% in Q1 to 11.6% in Q2 which is lower than the 20.6% in Q2 2012. Despite having picked up by Q4, 2012, the annual private sector credit growth declined from 13.4% during January 2013 to 8.1% by end March 2013 in part due to a reduction land transactions following the closure of the land registry office. Moreover, most of the credit to the private sector went to building/mortgage/construction (25.9%), trade (20.8%), manufacturing (22.1%), and agriculture (8%). The annual headline inflation decreased from an average of 4.1% in Q1 2013 to 3.5% in Q2 2013. The relatively stable and subdued commodity prices were due to surplus food supply following good weather conditions and exchange rate stability. Annual headline inflation has consequently reduced consistently from 18% in June 2012 to 3.4% by June 2013. The Uganda shilling opened the second quarter with a stable exchange rate appreciating from a period average of UGX 2,659.4 against the US dollar during Q1 2013 to an average of UGX 2585.7 during Q2 2013. Whereas this represents a modest strengthening of the local unit compared to the first quarter, the shilling depreciated from UGX 2,578 in April 2013 to UGX 2,931 in June 2013 on the account reduced official and private inflows. The central bank continued to intervene in the foreign exchange market to stabilize the exchange rate. External Sector The most recent data indicates that the trade deficit declined to UGX 381.67 billion (USD 145.4 million) during Q1 2013 from UGX 509.05 billion (USD 194.3 million) in Q4 2012 due an increase in export earnings. Export receipts amounted to UGX 764.81 billion (USD 291 million) at end-March 2013 compared to UGX 698.28 billion (USD 266.5 million) in Q4 in 2012. Export performance in Q1 2013 also exceeded the UGX 681.13 billion (USD 259.9m) recorded during the same period in 2012. The expansion in the export earnings during the Q1 was driven by increased receipts from cotton, tobacco, hides and skin exports. COMESA countries accounted for 48.2% of Uganda’s exports during Q1 2013. Imports decreased slightly from UGX 1,201.34 billion (USD 458.5 million) to UGX 1,146.48 billion (USD 437.6 million) between Q4 2012 and Q1 2013. The current account deficit was estimated to have decreased to USD 2,250 million (10.4% GDP) in June 2013 down from USD 2,334 million (12% of GDP) during the same period in 2012. The improvement in the current account deficit has been driven by the capital and financial account balance, which is estimated at USD 2,664 million in FY 2012/13 and projected to increase to USD 3,104 million in FY 2013/14. International reserves at USD 2,998.6 million in April 2013 were equivalent to 4.4 months of import cover.

OTHER NOTABLE DEVELOPMENTS AND UPDATES Political Developments In May 2013, President Yoweri Museveni made major changes to the Cabinet, Permanent Secretaries and the Army. Notable developments include the

Rising export receipts, reduction in imports, and the increased capital and financial inflows contributed to reduction in the current account deficit

President Museveni reshuffled the cabinet, army and permanent secretaries


appointment of the former Army Chief General Aronda Nyakairima as Internal Affairs minister, while 5 Ministers were transferred to other Ministries. The former Health Minister Dr. Christine Odoa was appointed as the Presidential Advisor on Health affairs. The reshuffle of the Permanent Secretaries followed the release of the Auditor General’s revealing widespread corruption of donor funds meant for reconstruction and rehabilitation of northern Uganda. In June 2013, the three Presidents of Uganda, Kenya and Rwanda signed a memorandum of understanding to build a new oil pipeline for the evacuation of crude oil connecting Uganda, South Sudan and terminating at the Port of Lamu (Kenya). The new pipeline is expected to relieve pressure on the existing pipeline between Mombasa and Eldoret (Kenya), and which is due to be extended to Uganda and Rwanda. The implementation of these commitments is expected to reduce congestion and improve efficiency at the ports of Mombasa and Dar-es-Salaam. Private Sector Activity The government signed a contract with Sinohydro Corporation of China for the construction of the 600MW Karuma Hydro Power Station that will provide the required energy supply for oil processing. Construction of the Karuma Dam is due to begin in August. In addition to establishing the 2 oil regulations earlier in 2013, the Uganda Government is rapidly moving to seek faster options for building an oil refinery and an oil pipeline to the sea in advance of the oil production scheduled for 2017. Donor Relations In June 2013 the IMF Executive Board completed the Sixth and final review of the Policy Support Instrument (PSI) and approved a new 3-year PSI. The review reaffirmed that the country’s macroeconomic performance was “satisfactory” will all end-December 2012 quantitative targets met. The IMF concluded that prudent monetary and fiscal policies were successful in bringing inflation under control, increasing economic growth, strengthening the external position, and supporting improvements in Public Financial Management. The authorities were commended for the on-going efforts to introduce a Treasury Single Account and for initiating the preparation of the Public Finance Management Bill both of which are expected to improve budget execution and transparency. However, in the short term, fiscal policy needs to focus on increasing tax revenue collection and structural reforms remain critical to improve the business regulatory environment to enhance productivity, promote diversification, and strengthen Governance and accountability.

RESULTS ACHIEVED Selected outputs and outcomes from the Bank’s portfolio during January-June 2013 The Bank continued to realize significant results during the first half of 2013 from its projects in Uganda. For instance, the support under the Road Sector Support 1 and 2 projects resulted into the upgrade of the 100km and 80km gravel roads, respectively, to bitumen standard, which in turn led to a reduction in travel time from 3 hours to 1.5 hours between Kabale-Kisoro, and Kababrole-Bundibugyo

The government signed a contract for the construction of the 600MW Karuma hydro power station

The 6th and final review under the current IMF PSI was successfully completed and a new 3-year PSI approved

Key results:

180 km of road was up-graded, reducing average travel time from 3 hours to 1.5 hours between Kabale-Kisoro and Kabarole-Bundibugyo districts in western Uganda


districts in western Uganda. Moreover, the completion of the 100km transmission line under the Bujagali interconnection project have also resulted in the halting of the expensive thermal plants, thus reducing the unit cost of electricity from USD 0.25 to USD 0.13, thereby realizing a saving of USD 9.5 million per month on subsidies to the government. The stabilized energy supply has enabled the manufacturing sub-sector to grow hence contributing to economic recovery. A detailed presentation of the results achieved by the Bank’s projects in Uganda during the first semester of 2013 is provided in Annex 1, Table A.6. Flagship Project: Community Agricultural Infrastructure Improvement Program - Phase 1 (CAIIP-1) Approved by the Boards of Directors in September 2007, the UA 30 million loan CAIIP1 is one of the most successful projects implemented by the Bank in Uganda through to June 2013. It has gained international recognition and won the 2013 US Department of the Treasury MDB Awards for benefiting about 2.59 million people. In line with its objectives, the project has improved farmers’ access to markets, improved economic competitiveness and increased incomes in the project region through improvements in rural infrastructure and their management. It covered 78 sub-counties in 26 districts of Eastern and Central Uganda, and had 2 main components, including: (i) rural infrastructure improvement, in particular the improvement of 3,510 km of existing community access roads linking production areas and villages with market centers; the rehabilitation of 390 km district roads so that they are passable by vehicles all year; including the routine maintenance of 5,267 km of community access roads and 587 km as well as improvement of 78 sub-county marketplace infrastructures; and (ii) community mobilization activities aimed at promoting local participation in the prioritization and selection for improvement of agricultural infrastructure and their subsequent maintenance. Expected project outcomes include (i) increases in the farm gate prices of staples such as cassava, maize, milk by about 67%; (ii) better transportation of produce, since produce buyers can access farms directly, and a 50% reduction in transportation costs to major towns; (iii) a reduction in travel times to major towns of more than 50%; (iv) post-harvest losses reduced by approximately 20%, especially for perishables; and (v) emergence of rural growth centers and more permanent housing; new schools and health facilities; and higher school enrolment.

The CAIIP-1’s activities were in direct response to Pillar 2 of Uganda’s Poverty Eradication Action Plan (PEAP), or Poverty Reduction Strategy Paper. The project applied a community and participatory approach, mobilizing residents to participate in taking inventory, priority setting, as well as projects selections to build, improve and maintain infrastructure. Consequently, a labor-intensive approach involving communities in the construction, supervision and maintenance of projects was used. Examples of project activities include: rural community access roads, district feeder roads, rural markets and assorted agro-processing facilities.

A 100 km transmission line was completed under the Bujagali interconnection project, reducing the cost of electricity from USD 0.25 to USD 0.13 and public savings of USD 9.5 million per month


III | SPECIAL THEME


TANZANIA’S INFRASTRUCTURE CONNECTIVITY AS A DEVELOPMENT OPPORTUNITY FOR EAST AFRICA

Favorable economic growth prospects for the East and Central Africa region will result in increased trade flows. This puts significant pressure on Tanzania’s seaport and transport infrastructure, suggesting the need to address trade bottlenecks through interventions, which need to balance between infrastructure investment and institutional reform aspects. Specific investments should prioritize seaport development and transport corridor infrastructure to facilitate regional trade connectivity. Institutional upgrades can contribute to improve coordination in the hinterland access regime and encourage efficiency-enhancing reforms.

1. Introduction Development prospects in East and Central Africa are expected to remain high (AfDB, OECD, UNDP and UNECA, 2013).2 The economic growth forecast of 7 percent for Tanzania and more than 5 percent on average per year for its neighboring landlocked countries—Burundi, Democratic Republic of the Congo (DRC), Malawi, Rwanda, Zambia—presents an opportunity, as favorable regional GDP growth rate will translate into more trade. Worldwide, the elasticity of trade to Gross Domestic Product (GDP) has been estimated to be above 3 since the 1990s, rising from 2 in the 1960s (Freund, 2009). For East Africa, Table 1 shows average growth rates of GDP and trade volumes over the last decade. Depending on the country, the ratio between trade volumes and GDP is between 1.1 and 5.8. This is good news, as the rapid increase in GDP growth will translate into even higher trade growth. This would reverse the downward spiral of the region’s share in world exports, which has been cut in half over the past three decades, and the overall decline in intra-regional trade among the six countries.

But for landlocked countries in the region, this promising outlook may be at risk if trade facilitation is not improved. For example, Freund and Rocha (2011) estimate that an inland transit time is the most important factor in reducing trade. A reduction by 1 day in inland travel times leads to a 7 percent increase in transport costs. This is equivalent to a 2 percentage point decrease in neighboring countries tariffs. For landlocked neighboring countries, Tanzania is one of the main

2 We would like to thank Adam Grodzicki from the European Union as well as Anthony Hughes and Mark Povey from Trademark East Africa for joint inter-agency cooperation. We are grateful to our colleagues Vera Oling, Prosper Charle, and Patrick Musa from the African Development Bank for useful comments and discussions. We also thank Jaime de Melo from the University of Geneva for his support and Tonia Kandiero for overall guidance.

transport and logistics gateways to the outside world. But while growth brings opportunities for Tanzania to benefit, it also brings a responsibility to make sure that its infrastructure does not act as a barrier to growth.

As documented by AfDB, EU and Trademark (2013), Tanzania’s transport and logistics infrastructure is under pressure to continue serving as a gateway for neighboring landlocked countries. This is so for inland transit by rail and road, but particularly for its main port, Dar es Salaam, which is considered to have significant room for efficiency improvements (Al-Eraqi and others, 2008; Morisset and others, 2013). Over the past decade, much like Maputo has lost business to Durban, Dar es Salaam has been losing business to other regional ports.

Table 1: Average GDP and Trade Volume Growth, 2003-2012 (in %) Country GDP Export

volumes Import volumes

Burundi 4.1 6.9 24.1

DRC 6.2 12.6 18.8

Kenya 4.6 4.8 9.6

Malawi 5.5 12.9 8.1

Rwanda 7.7 10.5 15.0

Tanzania 7.0 8.0 9.8

Zambia 6.2 10.6 16.4

Source: Central Banks. Chained import and export volumes are from the Balance of Payment.

This thematic chapter describes to overall context

and summarizes options for policy reforms. These derive from opportunities to enhance Tanzania’s transport and logistics infrastructure, as documented in AfDB, EU and Trademark (2013). Assuming that recent economic growth trends will continue, a major factor to sustaining growth trends in Tanzania and its neighboring land-locked


countries will be to support coordination of regional transport chains and to strengthen Tanzania’s transport infrastructure, including its seaports. This thematic chapter adopts AfDB’s (2010) approach and distinguishes between ‘soft’ institutional and regulatory reform measures and ‘hard’ infrastructure needs. Overall, strengthening regional transport connectivity and seaports offers a development opportunity for East Africa. 2. Seaports and Transport Corridors

Maritime Transport

The importance of seaports and regional transport interconnectivity for East Africa development prospects has been recognized for a long time (Hoyle, 1967). And improving the connectivity of seaports continues to be an opportunity for growth and trade. Dar es Salaam is the country’s largest seaport, which currently handles over 12 million tons of cargo per year, equivalent to more than 90 percent of the total country’s import and export volumes (Table 2). It is estimated that the Dar es Salaam port captures 14% of imports and exports of its neighboring countries. It increased its throughput from 7.2 million tons in 2007 to 12.4 million tons in 2012. Tanga port handles only 0.6 million tons comprising mostly agricultural and local industry materials. Being a lighterage port, Tanga is disadvantaged by its double handling operation. It is also sandwiched between the major ports of Mombasa in the north and Dar es Salaam to its south. Mtwara port handles 0.4 million tons a year. It is emerging as an anchor port for the offshore oil and gas discoveries. Trade linkages are still in their development phase. Thus, only the port of Dar es Salaam serves a large hinterland and regional neighbors, has substantial throughput volume, and services a large number of actors.

Maritime transport is under pressure to cope with current trade levels, as the port of Dar es Salaam is insufficiently equipped to handle the increase in containerization, and has yet to redefine the role of the Tanzania Ports Authority as regulator. Berth expansion and modernization is underway, but due to its urban location expansion capacity is limited. The port’s long ship waiting rates, ship turnaround time, and cargo dwell time penalizes Tanzania and its regional neighbors. This is because it undermines exporting activities relative to import-substituting activities, which benefit from the extra costs faced by importers due to delays.

In 2012, container vessels were queuing for an average of 11 days in the port of Dar es Salaam compared to 2 days in the port of Mombasa. This delay is mainly explained by the congestions of berths and non-adapted loading equipment.

While average dwell time declined from 21 days in 2009 to currently 9 days, it is still high (AfDB, EU, and Trademark, 2013). For example, dwell time is 5 days for domestic imports and 8 days for transit imports in Mombasa, and only 48 hours in other more developed ports, where dwell time is just equal to the time to physically handle boxes or containers. There are also significant inter-annual variations in dwell time in the port of Dar es Salaam, ranging from 5-23 days, making precise comparisons challenging. The main causes for excessive dwell time at the port of Dar es Salaam are slow custom clearance and excessive storage periods, which in part are due to the variability of customer behavior and the lack of sophisticated supply chains, as many customers import very small quantities.

Port fees are on average 74 percent higher in Dar es Salaam than in Mombasa (Morisset and others, 2013). This is because of higher wharfage charges, which in Dar es Salaam are proportional to the merchandise value, while they are flat fees in Mombasa. A flat fee for wharfage is also preferable as this allows for tariff predictability. Table 2: East African Seaport Trade Volumes, 2012 Port Trade Volume

(million tons) Imports Exports

Mombasa 21.9 84% 16%

Tanga 0.62 74% 26%

Dar es Salaam 12.1 85% 15%

Mtwara 0.36 69% 31%

Source: National Port Authorities.

Regional Transport Corridors

Tanzania has three main regional transport corridors: the Northern, Central, and Southern Corridors (Figure 1, p.38). In the Northern and Central Corridors, most freight is transported by road, although given the long distances involved, it could be more cost-efficient to use railways. Through Dar es Salaam, freight to and from Uganda, Rwanda, Burundi and the Eastern DRC must be transported by road, as there is currently no functioning rail connection. The Southern road and rail corridor provides access to the northern and central provinces of Zambia, to Malawi, and the Katanga province in


the DRC. There are also other secondary transport corridors, though they serve mainly national trade. Transport corridors are along areas of high population density (Figure 2). In all corridors, transport infrastructure bottlenecks contribute to high trade costs.

Figure 1: Principal Transport Corridors in East Africa

Source: Trademark East Africa.

Figure 2: Areas of High Population Density in East Africa

Source: Trademark East Africa.

Tanzania is struggling to cope with fast-growing transport infrastructure needs and maintenance challenges of the existing road network. In fact, besides seaports, the major bottleneck to sustaining recent growth trends in Tanzania and its neighboring land-locked countries will be Tanzania’s road transport infrastructure (AfDB, EU and Trademark 2013).

Railway System

Tanzania has two main railway systems. The first and oldest system is the mainline comprising the central corridor between the port of Dar es Salaam linking central and western areas of the country.

This line, which was constructed between 1907 and 1914, was also important for the neighboring countries of Rwanda, Burundi and the DRC as it provided a direct trade link to the region’s main port at Dar es Salaam. In 1928, a spur line was constructed northwards from Tabora to Mwanza on Lake Victoria, which also served Uganda via a rail-lake service. The Tanzania–Zambia Railway, which is still operational, is the second railway system, constructed from 1970 to 1975, financed by the Peoples’ Republic of China.

The railway system is at a critical junction and if efficiency improvements are not addressed timely could stop functioning (AfDB, 2012). This in turn will increase pressure on the road system, which is currently profitable to private operators because of rapidly growing transport demand, but is socially costly because of a lack of an effective operator licensing system that ensures proper usage and upkeep of the road network. Thus, under its current trajectory, the overall transport system is under pressure because of growing transport demand and maintenance challenges. Also lacking is a more appropriate regulatory environment (AfDB, EU and Trademark, 2013).

3. Coordination Mechanisms

Structural Coordination Challenges In addition to transport infrastructure, the quality of hinterland access depends on the smooth cooperation of a large number of economic agents, such as terminal operators, freight forwarders, transport operators, port authorities, and government institutions, including regional customs. These different private and public sector actors can all benefit from improving hinterland infrastructure accessibility, but since individual actors cannot fully appropriate the benefits, inter-organizational arrangements, or coalitions, are necessary to improving hinterland transport services and infrastructure. This is equivalent to a ‘collective action problem’ among the different actors (Olson, 1971). Even though ‘collective action’ is in the interest of all, it does not arise spontaneously. This underlines the importance of institutional and organizational capacity. It also suggests an important role for Regional Economic Commissions and National Corridor Coordination Agencies as facilitators.

Tanzania’s coordination mechanisms have structural challenges, not only by infrastructure gaps causing high transport costs, but also numerous


‘soft’ factors, such as a challenging business environment and limited fiscal space. This is because markets play a key role through the price mechanism. In the private sector, coordination can take place within a single large firm, for example through hierarchies. And governments provide public goods, such as safety and transport infrastructure development, planning, and maintenance (de Langen and Chouly, 2004). Other promising forms of coordination, such as for example public private partnerships, face institutional and organizational capacity constraints. As a result of structural challenges, there is trade displacement, as neighboring countries prefer to channel goods via other transport routes through the ports of Djibouti, Mombasa, and Durban (Figure 3).

Figure 3: Trade Displacement in Zambia, Malawi and DRC, 2012

Source: National Port Authorities.

Other factors that explain why coordination can

be challenging include the unequal distribution of costs and benefits of coordination across countries—as governments could bear costs at the benefit of their neighbors. Yet the lack of financial resources or willingness to invest can cause disruptions in the supply chain. For some firms, strategic considerations can play a role, as firms are reluctant to improve coordination if competitors also benefit. Risk-averse behavior and short-term focus of the private sector are other contributing factors for an uneven hinterland access regime of Tanzania’s seaports.

Moreover, as Westlund (1999) shows, investments in coordination mechanisms are often associated with high adaptation costs. Thus, both the private and public sector have low incentives for change.

Coordination challenges can persist for a long time—unless they are addressed through a ‘big push’ combination of both infrastructure investments and reforms that simultaneously enhance coordination.

Overcoming Coordination Challenges The starting point for assessing reform options is to change the power structure between winners and losers from the status quo. Baldwin and Nicoud (2008) suggest the status quo maintained because winners are more powerful than losers in influencing decision makers, even if their individual gains are much lower than the overall welfare loss for society. In fact, addressing asymmetric bargaining power offers an opportunity for rapid improvements of transport interconnectivity.

Another important element to improve the hinterland access regime is the acknowledgement for the need of coordination beyond markets. This is because transaction costs with alternative forms for coordination can be more efficient than through markets. Also, due to bounded rationality and opportunistic behavior, transaction costs of contracts can be substantial. This is especially true for complex agreements with a large number of state and non-state actors (van der Horst and de Langen, 2008). Ways to overcome these coordination challenges in the hinterland transport chains include:

The creation of public-private partnerships—these are important institutional mechanisms, because they can provide a fertile ground for collective action. As they do not develop automatically, this could be an important area of support from external development partners.

The formalization of arrangements—they can stimulate commitment among government and among the private sector. Examples include standardized procedures, standards for quality service, and generally better formalized procedures—all of which are also helpful to address rent-seeking practices (Transparency International and Trademark, 2012).

Strengthening the role and voice of the private sector—when not satisfied with a solution to a collective action problem, the private sector might strive to improve it. Voice also adds to the performance of joint initiatives, and can stimulate organizational changes.


In Tanzania numerous public-private partnerships are of commercial interest, but sometimes do not come to closure because of the ‘time-consistency’ problem. Because of high fixed costs in investments, there is a risk that government wants to renegotiate the contract, once the investments are carried out. Knowing this, the private sector will not invest in the first place. An attractive option would be to bring in the private sector under an operating concession agreement. The private party will have to invest in equipment, but not in basic infrastructure. At the same time, if governments engage in institutional reforms, the trust of the private sector might increase.

In the short run, the modernization of the port of Dar es Salaam is a development opportunity. In addition to plans to expand berths, modernization also includes efficiency-enhancing reforms. Similar to infrastructure transport connectivity challenges—beyond the asymmetric distribution of bargaining power between winners and losers—there are fundamental coordination challenges that need to be overcome. As a first step, Morisset and others (2013) suggest increasing end-users’ awareness of the social costs related to the low efficiency of the port of Dar es Salaam to raise public voice.

Increasing efficiency would also provide an opportunity to reduce rent-seeking practices because there is less room for negotiation. A survey among the East African Community’s Northern and Central corridors in 2011 suggests that bribes were mainly demanded to speed up the service at various points, among many other reasons. In the case of Tanzania, estimated enticement costs per year consist of about 18.6 percent of the value of goods transported (Transparency International and Trademark, 2012). This may have an impact on regional trade flows.

Using data collected on illicit payments by firms to port officials in Maputo and Durban, Sequeira and Djankov (2013) show that coercive types of rent-seeking (having to pay to obtain a service) encourage companies to travel long distances by road just to avoid additional payments. By contrast, collusive types of rent-seeking (selling tariff evasion) result in the loss of government revenues, but are less costly in terms of efficiency and trade distortion. Thus, the rent-seeking extraction method can lead to trade displacements effects, and can be taken into account when designing reforms.

In short, general elements for reform include coalition building and engagement in overall efficiency improvements, such as the reduction of

dwell time (currently 9 days dwell time) and reduced transport transit time (currently about 3.5 days on average), the formalization contracts, and the standardization of procedures—all of which reduce rent-seeking incentives because there would be less room for negotiation.

4. Transport Interconnectivity

Seaports as East Africa’s Gateway to Growth Given the shortage of natural ports of along East African coastlines, only a handful of widely separated commercial seaports are suitable for international maritime traffic. Seaport locations are therefore of strategic interest for trade and other economic relationships (Magenheim, 2007). The main ports for East Africa are Mombasa and Dar es Salam, who are both competing for inland markets in Rwanda and Uganda. More than 90 percent of Tanzania’s total trade volume transits through the port of Dar es Salaam. The port is a hub for East African regional trade.

The performance of the port of Dar es Salaam has varied over time. As a result of privatization in the 1990s, the port became more efficient (Al-Eraqi and others, 2008), but its performance deteriorated gradually, and currently, its efficiency is low again. This despite renewed efforts of Tanzania’s Port Authority to implement reforms with the aim to accelerate operations. The current inefficiency at the port is likely the result of conflict of interests in the existing incentive structure because of asymmetric information between administration and users; widespread rent-seeking; and protection for local producers allowing local firms to increase their margins, or to produce without the maximum efficiency. Protection can happen in two ways. If it is done by introducing extra administrative procedures, it will cause delays and affect port efficiency. However, if protection is strictly a tariff, then the link to port efficiency will be far-fetched. Protection also favors importers, especially if they can act collusively.

Morisset and others (2013) estimate that the total cumulated costs of extra delays and additional monetary payments—compared to the port of Mombasa—are equivalent to a tariff of 22 percent on container imports and about 5 percent on bulk imports. For energy imports, which make up on third of total imports, the tariff equivalent of extra delays and fees could be as high as 37 percent. These extra-cost are passed-through to Tanzania and its land-locked neighboring countries. At the


aggregate level, the estimated total welfare losses generated by inefficiency at the port are likely to be high. Port inefficiency is equivalent to an import tariff. Local producers and consumers are losing as the result of higher final prices, the cost of imported intermediary products is higher for local producers, and the purchasing power of final consumers is eroded. As imported goods are less affordable, the import demand decreases and the society’s welfare are substantially reduced.

Moreover, through increase in prices, additional import tariffs due to port inefficiency will have significant implications on household welfare. Based on the average share of goods in Tanzanian household expenditures, Morisset and others (2013) estimate that a Tanzanian household could save 8.5 percent of its total expenditures, or US$147 per year if the port of Dar Es Salaam could become as efficient as Mombasa. Thus, it is likely that inefficiencies in the port of Dar es Salaam are a bottleneck to growth and regional trade performance, and are slowing the decline in national poverty.

Current traffic projections indicate that large investments will be required at another location to augment the port of Dar es Salaam, which will reach full capacity by 2020 (AfDB, 2012). In the medium to long-term, there is the need to create a new Indian Ocean port capacity outside the urban area of Dar es Salaam. Within that option, there are several choices available. The most likely implementation will be support from China to create a new deep-sea port in Bagamoyo and develop the surrounding transport corridor through an anticipated US$11 billion investment, including road and rail access, an export processing zone, and an airport. Once the existing capacity has been expanded, surplus traffic can be handled.

The main objective of both ports will be to act as ‘East African Gateway’ next to the port of Mombasa. The ports of Dar es Salaam and Bagamoyo can become highly profitable, because there is sufficient volume of transactions to guarantee economies of scale, and limited competition from other ports, road transport networks, and between port operators. At present, all the standard port management models appear applicable. Landlord port organization is likely the preferred option to increase efficiency, attract private capital, and gain market share. However, the seaports have to be supported by sufficient hinterland connectivity and extended port facilities, such as dry ports.

Investments in Transport Infrastructure In line with seaport development implementation, the Central and Northern Corridors offer an opportunity for improvement at the same time. This requires strategic investments in both road and railway infrastructure. Strengthening toad quality need is another opportunity, based on the traffic flow forecast, and maintenance plans need to be formulated. The railway network at the Central Line to Mwanza and Kigoma needs to be rehabilitated to allow rail transport services to be offered to trading partners. In addition, railway transport services need to achieve an adequately functioning level. By managing the rail services properly, the modal shift from road to rail transport can be easily established, due to the low cost of rail transport on long distances. Moreover, the Southern Corridor has ample potential for local business development and transit trade to Malawi, but requires a better transport connection to the seaports. All development plans need to be assessed against economic and financial feasibility. Infrastructure needs to consider traffic forecasts—transit demand through Tanzania is estimated to increase from currently 2.7 million tons to 9.8 million tons by 2030. Overall, it is estimated that Tanzania will face an increase in the demand for transport by 16 percent in 2020. 5. Conclusion Addressing Tanzania’s infrastructure bottlenecks offers an opportunity to capture gains from positive development prospects in East Africa. The specific short-run priority is the development of Tanzania’s seaport system, which is the basis of entire transport and logistics system for the East Africa region. These include reforms of the port of Dar es Salaam and the rapid implementation of investment decisions of the new Indian Ocean sea port. Regardless of the choice, the losses from a delay in decision-taking are likely to be high (AfDB, EU, and Trademark, 2013).

Continued efforts to invest in transport interconnectivity also suggest the need for institutional and regulatory reform, and enhanced infrastructure investment planning. Neither of these is without cost. The first is largely a question of political will, while the second offers policy choices, but requires that external support can be mobilized for substantial financial investments to achieve results. The extent of external financing will in turn depend on its growth prospects, and further


enhancements of its national and regional institutions. Other policy objectives are to provide an environment attractive to investors and facilitate regional coordination.

References

AfDB, EU, and Trademark. 2013. Assessment of Tanzania’s Ports in the Regional Economic Environment. Dar es Salaam: African Development Bank, European Union, and Trademark East Africa. Processed.

AfDB, OECD, UNDP, and UNECA. 2013. African Economic Outlook: Structural Transformation and Natural Resources. Paris: African Development Bank, Organization of Economic Development and Cooperation, United Nations Development Program, and United Nations Economic Commission for Africa.

AfDB. 2012 Tanzania Transport Sector Review. Dar es Salaam: African Development Bank. Processed.

AfDB. 2010. African Development Report: Ports, Logistics, and Trade in Africa. Oxford: Oxford University Press.

Al-Eraqi, A.S., A. Mustafa, A.T. Khader, and C.P. Barros, 2008. “Efficiency of Middle Eastern and East Africa Seaports.” European Journal of Scientific Research 23(4): 597-612.

Baldwin R. and F. Robert-Nicoud. 2008. “Entry and Asymmetric Lobbying: Why Governments Pick Losers.” Journal of the European Economic Association 5(5): 1064-1093.

de Langen, P.W. and A. Chouly. 2004. “Hinterland Access Regimes in Seaports.” European Journal of Transport and Infrastructure Research 4(4): 361-380.

Freund, C. 2009. Demystifying the Collapse of Trade. Voxeu.org, July 3.

Freund, C. and N. Rocha. 2011. “What Constraints Africa’s Exports?” World Bank Economic Review 25(3): 361-386.

Hoyle, B.S. 1967. The Seaports of East Africa: A Geographical Study. Nairobi: East African Publishing House for Makerere Institute of Social Research. Processed.

Magenheim, G.S. 2007. “Chinese Influence on U.S.

Operational Access to African Seaports.” JFQ Forum 54(2): 22-27.

Morisset, J., C. Moret, and J. Regolo. 2013. “How to Push Efficiency Enhancing Reforms at the Port of Dar Es Salaam?” Africa Trade Policy Note 35. Washington DC: World Bank.

Olson, M. 1971. The logic of Collective Action: Public Goods and the Theory of Groups. Cambridge, MA: Harvard University Press.

Sequeira, S. and S. Djankov. 2013. Corruption and Firm Behavior: Evidence from African Ports. London: London School of Economics.

Transparency International and Trademark East Africa. 2012. Bribery as a Non-tariff Barrier to Trade: A Case Study of East African Countries. Nairobi.

van der Horst, M.R. and P.W. de Langen. 2008. “Coordination in Hinterland Chains: A Major Challenge for the Seaport Community.” Maritime Economics and Logistics 10(2): 108-129.

Westlund, H. 1999. “An Interaction-Cost Perspective on Networks and Territory.” Annals of Regional Science 33(2): 93-121.


IV | RESULTS ANNEX 3

3 “N/A” in the following tables means that no results were generated by

The ongoing projects during the period under review.


Table A.1. Burundi: Selected results achieved during January-June 2013

Project Title

Outputs

Outcomes

Transport Nyamitang-Ruhwa-Ntendezi-Mwityazo Road Project (50.6 km) (16/12/2008 – 31/12/2013; UA 49.4 m grant)

Rehabilitation of rural roads on 30km. o Reduced travel time (from 1h30 to 45 minutes) between Bujumbura and Ruhwa o Reduced time to complete border formalities (Ruhwa one-stop border post) from 1 hour to less than 10 minutes

Gitéga-Nyangungu-Ngozi Road Development and asphalting project Phase I (30 km) (27/09/2010 – 31/12/ 2013 UA 24.1 m grant)

o Installation of road signs o 70 km of rural roads completed o Completion of the Bridge over the River Ruvubu

o Reduced travel time o Quick and easy access to schools, water source, markets, etc. o Development of income-generating activities for the population in the project region

Gitéga-Nyangungu-Ngozi Road Development and asphalting project Phase II (50 km) (29/06/2011 – 31/12/2015 - UA 32.0 m grant)

N/A N/A

Project to develop road on the North-South Corridor (45 km) (27/06/2012 – 31/12/2017; UA 27.5 m grant)

N/A N/A

Isaka-Kigali Railway Study Phase II (Regional) (17/11/2009 – 31/12/2013; UA 1.7m grant)

o Draft final report delivered by the consultant for discussion and approval by the beneficiary countries (Burundi, Rwanda and Tanzania) and the African Development Bank o Training provided to selected transport sector staff in the three beneficiary countries on financing, management and operation of railway infrastructure

o Regional cooperation in the development of the project has been enhanced in the three beneficiary countries, including at the level of the transport sector Ministers, which has increased ownership of the project and is expected to facilitate resource mobilization

Agriculture Bugesera Agricultural Development Support Project (Regional) (25/09/2009 – 31/12/2015; UA 15.0 m grant)

o Development of 300 hectares of watersheds by planting of trees and 100 ha of marsh o Distribution of 518 cows and 2,100 goats to household

o Increased household incomes through jobs created by development works o Reduction of malnutrition through improved agricultural and dairy production.

Project to Support the Lake Tanganyika Integrated Regional Development Program (Regional) 17/11/2004 – 31/12/2013 UA 4.96 m grant)

o Capacity building of more than 400 committee members fishermen o Distribution of 700 utilities drying and smoking (Municipality of Gifuruzi) o Preparation of seedlings for the reforestation of 300 hectares

N/A

Social Sector Support Job Creation Project (24/06/2009–31/12/2013; UA 12.0m grant)

Completion of the construction of six schools in the provinces of Ngozi and Kayanza

Increased income in the project region following the creation of over 1,000 jobs, including 37% held by women

The Multisector Project For Socioeconomic Reinsertion (13/12/2004–31/06/2013; UA 9,81m grant)

Completion of the construction of 19 schools in the intervention zone

Creation of a more conducive environment for teachers and students in the project area. The enrollment rate has risen sharply, from an average of 65% to 80%

Water and Sanitation


Project to support the rehabilitation and expansion of water infrastructure in rural areas (14/12/2005–31/12/2013; UA 12.0 m grant)

Building of a water tank (2400 cubic feet), a pumping station and a discharge/distribution. pipe

Improved access to safe drinking water for 67,000 people in Gihosha town

Lake Victoria Water and Sanitation Program II (Regional) (17/02/2010 – 31/12/2015; UA 14.1 m grant)

N/A N/A

Energy NELSAP Interconnection (Regional) (27/08/2008 – 31/12/2014; UA 15.2 m grant)

N/A4 N/A

Multi-sector

Support Program for Economic Reforms (11/08/2012 – 31/12/2013; UA 11.0 m grant)

N/A N/A

Institutional Capacity Building Project: (i) Data collection on labor and social protection, (ii) Promotion of employment and youth entrepreneurship, (iii) Public Financial Management (iv ) Monitoring and evaluation of poverty, and (v) Private Sector Development (28/11/2012 – 31/12/2014; UA 6.3 m grant)

N/A N/A

4 N/A = No outputs achieved to-date. Project/ program is less than 15% disbursed and procurement activities are in their initial stages and in a few cases are being finalized.


Table A.2. Kenya: Selected results achieved during January-June 2013

Project Title

Outputs

Outcomes

Agriculture Kimira- Oluch Smallholder Farm Improvement Project (31May2006-30Sep2013; ADF Loan: UA 22.98m, ADF Grant: UA1.15m)

N/A N/A

Small-Scale Horticulture Development Project (05Sep2007-31Dec2014; ADF Loan: UA 17m)

o 6 out of 9 schemes rehabilitated with 1,403 ha under irrigation from 719ha.

o 1,403 ha under various horticultural crops and food crops for local market (Tomatoes, onions, kales, water melons, Asian vegetables, green maize, bananas and African Leafy vegetables) and export market (French beans, chilies).

o Increased average net household incomes from Ksh 9,500 in the project area to Ksh 27,760 per month for Kabaa irrigation scheme (214 households) which has been in full crop production since November 2011. This increase is realized through linkages with service providers and other stakeholders with complementary activities

o Increased cash flow in the completed schemes has contributed to (i) Pursuit of better education opportunities in private schools and colleges; (ii) Participation in Financial Services (credit, and savings) with an increased number of service providers within the schemes (M-Pesa and Bank agents)

o All gender groups participating along the value chain (men & women at production, youth in marketing and transportation)

Green Zone Dev. Support Project (12Oct2005-31Dec2013; ADF Loan 25.04m)

o Maintenance of 243 Km of access road

o Consolidation and maintenance of 750 Ha of tea and 1000 Ha of assorted tree species as well as maintenance and protection of 12,000 Ha of rehabilitated forest sites

o Community forest associations planted over 1,769 ha of forest trees (both exotic and indigenous); produced 8,085 tons of potatoes, 3,450 kg of honey, 1,244 litres of liquid soap from soap making initiatives, 890 kg of maize flour from posho mills and raised 2,067 rabbits

o Improved road network has greatly enhanced forest management and conservation activities as well as facilitate farmers transport their farm produce to the markets and farm inputs to the farms

o Sustainable employment opportunities for peri-forest communities (including youth and women).

o Support to community income generating activities has led to increase of income by Ksh 36,000 per month per household.

Ewaso Ng'ïro North Natural Resources Conservation Project (22Apr2005-31Dec2013; ADF Loan: UA 13.59m; ADF Grant: UA 2.89m)

Water Points Completed within the said Period: o Water Pans-13 (Dol dol, Matangi

and Karaba in Laikipia, Lororoi in Isiolo. Kiangok,Baawa, Lare Ng’iro, Sepache, Lolkunyani in Samburu, Songa, Qarsa Simiti, HaroJillo and Godana Katelo in Marsabit)

o Sand Dam- 2 (Longopito in Isiolo and Afarel in Marsabit

o Boreholes-10 (Soteni in Meru, Thome in Laikipia, Arge,Merille, Ngurunit, Turbi II, Wadaa in Marsabit, Burat,Machalo,and Biliqi in Isiolo)

o Competition for pastoralist Resources both Pasture and Water reduced

o Improved accessibility to water, that is distances travelled to the nearest Watering Points, reduced from days walking distance to less than 3 hours walking distance

o Improved livelihoods: there is more time to undertake other productive activities (income generating ones). This in the long run will mean healthier people and reduced levels of poverty.


Restoration of Farm Infrastructure and Rural Livelihood Project (RFI&RLP) (4th June 2009-31st Dec2013; ADF Loan: UA 15M)

o Constructed additional 2,000 low cost shelter for internally displaced persons (IDPs) at Njoro, Molo, Kuresoi, Eldoret East, Eldoret West and Wareng Districts

o Distributed agricultural inputs packs comprising of maize package of 50Kg basal fertilizer,50kg top dressing fertilizer and 10kg maize seeds to 2,000 households

o Distributed 1,050,000 tree seedlings to the 21,000 returning IDPs

o 2,000 Households were resettled back to their farms and were able to undertake economical activities as they used to do before the post-election violence

o Improved food production from 8 bags per acre to 23 bags per acre in the project areas (improved food security)

o Improved household incomes from approximately Ksh 4,000 to Ksh 34,000 per month. Through the sale of the surplus crop produce the households were able to earn more income for other uses. Each household of 6 people needed approximately 6 bags of maize for consumption.

Multinational - Drought Resilience and Sustainable Livelihood (19Dec2012-30Jun2018; ADF Loan: UA 37.41m)

N/A N/A

Transport

Timboroa - Eldoret Road Project (24Nov2010-29Feb2016; ADF Loan: UA35.0m)

N/A N/A

Mombasa-Nairobi-Addis Corridor II (01Jul2009-31Dec2015; ADF Loan: UA 125.0m)

N/A N/A

Arusha- Namanga-Athi River Road Development (13Dec2006-31Dec2013; ADF Loan: UA 49.24m)

N/A N/A

Mombasa-Nairobi-Addis Corridor III (30Nov2011-31Dec2017; ADF Loan : UA 120m)

N/A N/A

Water and Sanitation Integrated Land & Water Management (27Aug2009-30Dec2013; AWTF Grant : UA 1.69m)

o 13 river gauging stations established including 1 automatic weather station with data collection on a regular basis

o 84 community based organizations trained on new technologies and proposal writing

o 142 farm community sub-projects formulated and are currently under implementation

N/A

Water Services Boards Support Project (26Nov2007-30Dec2013; ADF Loan: UA 35.19m; RWSSI Grant: UA 9.78m)

o 2 Intakes at Muranga Bulk water supply project completed and treatment plants with a total capacity of 43,511m3/day completed. Bulk water supply pipeline for 60Km installed

o In Kibera, 11km of water lines installed and 3 km of sewer lines installed. 9 ablution blocks completed and connected to water and sewer lines

o 29 rural water supply and sanitation projects completed.

o Water and Sanitation levels have improved for 48,000 people in Kibera.

o A total of 40,000 people in the rural areas of the project are benefitting from improved access to water and sanitation.

Multinational: Lake Victoria Water and Sanitation Programme (17Dec2010 - 31Dec2015; ADF Grant : UA 10.39m)

N/A

N/A


Nairobi River Basin Restoration (06Dec2010 - 31Dec2015; ADF Loan: UA 35m)

o Main trunk sewers installed for 2 Km N/A

Small Towns Water and Sanitation (03Nov2009 - 31Dec2014; ADF Loan : UA 70.0m)

N/A N/A

Human Development

Community Empowerment and Institutional Support Project (17Dec2007-31Jul2014; ADF Loan: UA 17m)

o 77 county and sub-county planning offices have been constructed

o ICT equipment procured for 77 District Planning Offices

o 100 staff of the Ministry of Devolution and Planning have been sponsored for Master’s degree programmes and 600 women trained on leadership

o Improved leadership skills for women o Increased awareness about devolved funds and

increased effectiveness of county and sub-county planning officials

o enhanced capacity of the Ministry of devolution and planning

Technical Industrial Vocational and Entrepreneurship Training (16Dec2008-31Dec2013; ADF Loan: UA 25m )

o A study on national skills inventory for key Vision 2030 sectors concluded

o 52 TIVET staff trained from certificate to diploma level in sciences programs

o Engineering equipment installed and in use in three TIVET institutions

N/A

Education III Project(30Jun 2013-ADF loan; ADF Grant

o A total of 442 classrooms and science laboratories constructed

o 350 schools provided with learning/teaching materials and laboratory equipment

o The completed facilities as well as provision of furniture, equipment and learning support materials contributed to increased enrolment and improved quality of learning outcomes specifically in math and sciences

Support to Enhancement of Quality and Relevance in HEST (14Nov2012-30Jun2018; ADF Loan: UA28m)

N/A N/A

Power Mombasa - Nairobi Transmission Line (06May2009-31Dec2013; ADF Loan: UA50m)

N/A N/A

Kenya Power Transmission Systems Improvement Project (06Dec2010-30Jun2015; ADF Loan: UA 46.7m)

N/A N/A

Menengai Geothermal Development project (10Jul2012-31Dec2017; ADF Loan: UA 80m, SREP Loan: UA 11.64m, SREP Grant: UA 4.99m)

N/A N/A

NELSAP -Kenya Component (16Jun2010-31Dec2014; ADF Loan: UA 39.77m)

N/A N/A


Table A.3. Rwanda: Selected results achieved during January-June 2013

Project Title

Outputs

Outcomes

Agriculture Bugesera Agricultural Development Support Project (24/07/2006 – 31/12/2013; UA 10m grant)

o Rehabilitation of 250ha of marshland that started in 2010 completed and plots of 25 acres each distributed to 1,239 households, 7% and 41.7% of which were formerly landless and female-headed households respectively. All 250ha was planted with rice and harvesting is currently on-going

N/A

Transport Butare-Kitabi-Ntendezi Road (25/03/2009 – 31/12/2013; UA16m grant)

o Rehabilitation of 30Km from ‘surface-dressed’ to ‘asphalt-concrete’ from Crete Congo/Nil to Ntendezi completed

N/A


Rural Water and Sanitation-Phase II (01/07/2009 – 31/12/2013; UA 16m grant)

o 8 water supply systems of 185km constructed in four districts; supplying a total of 174,680 people

o 10,000 domestic latrines completed, increasing the total number of domestic latrines constructed since the start of the project to 12,210 and covering 15 districts

o Average distance travelled to collect water reduced from 2km to 500m, thus reducing the average travel time to the nearest water point from 1 hour to less than 10 minutes.

Human Development

Support to Skills Development in Science and Technology (11/11/2008 – 31/12/2013; UA 6m grant)

o 30 MAC computers delivered to the Faculty of Architecture and Environmental Design at Kigali Institute of Technology (KIST)

o 190 female students at three national universities received full scholarships in science and technology related fields for academic year 2013

o Scholarships to female students contributed to a 98% retention rate for female students pursuing higher education in science and technology in the three beneficiary national universities

Regional ICT Center of Excellence (CoE) (14/12/2010 – 30/07/2016; UA 8.6m loan)

o Internships have been secured for all the 24 students (including one student from Kenya) that enrolled for studies in academic year 2012

N/A

Multi-sector Competitiveness and Enterprise Development (29/12/2008 – 31/05/2013; UA 5m grant)

o 300 SMEs coached and mentored in various business competencies under the Hanga Umurimo programme supported by the project. 221 of the 300 SMEs received credit guarantees and 118 SMEs that received credit guarrantees, 49.6% of which are female owned business, have received funding from commercial banks

o The 9 institutional development advisors funded by the project at the Rwanda Development Board supported the negotiation and closure of a USD 140 million joint venture agreement with Korea Telecom for 4G broadband internet provision

o 1,103 new jobs have been created by the SMEs that have accessed credit under the project-supported Hanga Umurimo programme.


Support for Policy and Strategy Development (18/09/2009 – 30/09/2013; UA 1m grant)

o Rwanda Knowledge Management System (Rwandapedia) developed to provide an interactive database of results achieved by the Government of Rwanda, the contributing factors and the available investment and tourism opportunities, among other things

N/A

Multinational Isaka-Kigali Railway Study Phase II (17/11/2009 – 31/12/2013; UA 1.67m grant)

o Draft final report delivered by the consultant for discussion and approval by the beneficiary countries (Burundi, Rwanda and Tanzania) and the African Development Bank

o Training provided to selected transport sector

staff in the three beneficiary countries on financing, management and operation of railway infrastructure

o Regional cooperation in the development of the project has been enhanced in the three beneficiary countries, including at the level of the transport sector Ministers, which has increased ownership of the project and is expected to facilitate resource mobilization

Nyamitanga-Ruhwa-Ntendezi-Mwityazo Multinational road project (16/12/2008 – 31/12/2013; UA 50.62m grant)

o Upgrading of 50km to asphalt-concrete from Cyangugu to Mwityazo and a 40 meter bridge completed

o Construction of One-Stop Border Post at Ruhwa (Rwanda/Burundi) completed;

o Rural access index in the project region (a measure of all-weather road accessibility) increased from 31% to 45%, reducing the monthly vehicle operation costs from USD 51 to USD 33

o Improved road accessibility has increased the average monthly household incomes in the project region from USD 60 to USD 120

NELSAP Interconnection (27/11/2008 – 31/12/2014; UA 30.74m grant)

N/A5 N/A

Bugesera Multinational Agriculture project (25/09/2009 – 31/12/2017 ; UA 14.98m loan)

o 446 cows distributed, one cow per household (project is supporting the Government’s ‘One cow per poor family’ programme) increasing the total number of beneficiary households to 1,000 since October 2011

o 3 silos of 2000 metric tonnes each under construction: implementation progress on civil works increased from 82% to 95% between January and June 2013 and from 30% to 78% for equipment installation during the same period

o Households benefiting from the ‘one cow’ programme have graduated out of poverty. A beneficiary household on average gets 7-10 liters of milk per day, 2-3 liters are consumed by the household while the remainder is sold yielding an average daily income of Rwf 900 (USD 1.38)

Rubavu-Gisiza road project (25/07/2012 – 31/12/2017; UA 45.05m loan & grant)

N/A N/A

Sustainable management of woodlands and restoration of natural forests of Rwanda (29/11/2011 – 31/05/2014; UA 4.015m grant)

N/A N/A

Lake Victoria Water and Sanitation Program II (17/02/2010 – 31/12/2015; UA 15.11m grant)

N/A N/A

5 N/A = No outputs achieved to-date. Project/ program is less than 15% disbursed and procurement activities are in their initial stages and in a few cases are being finalized.


Table A.4. Seychelles: Selected results achieved during January-June 2013

Project Title

Outputs

Outcomes

Financial governance (Multi-sector) Policy Based Partial Credit Guarantee Program (PBPCGP) (02/12/2009- 12/2025; UA 6.4m guarantee)

o Successful public debt restructuring with commercial creditors, comparable to Paris Club agreement by mid-2010

o Debt restructuring with most commercial creditors reached. Only one remaining commercial settlement (with EXIM Bank) as at May 2013

ICT

Seychelles Submarine Cable Project (27/04/2011- 2024; US$12m senior loan)

o 1,900km undersea cable constructed. (Completed in August 2012)

o Reduced cost of bandwidth from USD 50 /month in 2010 to USD15/month at end-2012 to USD13/month as of June 2013 (lowest entry level bandwidth)

o Additional non-tax revenue for Government amounting to USD 416,000 as of June 2013

Capacity Building Statistical Capacity Building program (04/2011; UA0.491m)

o N/A6 o N/A

6 The project has not been supervised since its first disbursement in June 2012, thus no outputs and outcomes have been monitored.


Table A.5. Tanzania: Selected results achieved during January-June 2013

Project Title

Outputs

Outcomes

Transport

Singida – Babati- Mijingu Road Upgrading (UA60m loan 17/09/2007- 31/12/2014)

o Completion of 223.5 km of road: (i) Lot 1: Singida-Katesh road section (65.1km); (ii) Lot 2: Katesh - Dareda section (73.8km); and (iii) Lot 3: Dareda - Babati – Minjingu road section (84.6 km).

N/A

Arusha –Namanga-Athi River Road (UA 0.54m; UA 3.5m grants and JICA UA 39m loan 13/11/2009- 31/12/2013)

o Completion of 240 km of road o Completion of study/Design & Bidding

documents for 560 km Arusha to Voi road and Tanga to Malindi road.

o Weighted average traffic along the project road increased by 36% from 1,325 in 2006 to 1,795 in 2013

o Paved roads in good condition in Arusha Region (Tanzania) increases from 163 km (46% of the paved road) in 2006 to 267 km (76%) in 2013

Road Sector Support Project I (UA 152m loan 02/12/2009- 31/12/2015)

o 48.7 km of road completed N/A

Road Sector Support Project II (UA140m loan 05/04/2012- 31/12/2017)

NA NA

Energy

Electricity V Project (UA28.68 loan & UA1.32 Grant 14/12/2007- 30/06/2014)

N/A

N/A

Iringa-Shinyanga Transmission Backbone (UA45.36m loan 26/10/2010- 31/12/2014)

N/A

N/A


Rural Water Supply and Sanitation II (UA59m loan & Grant 5.80m 15/09/2010- 31/12/2015)

N/A

N/A

Zanzibar Water Supply & Sanitation Program (UA25m loan & Grant 2.76m 11/11/2008- 31/12/2013)

o 600 teachers, health inspectors trained on gender sensitive sanitary & hand washing promotion

o Nine rural water supply and sanitation schemes completed (19 borehole; 9 mainlines and storage reservoirs)

o 300 schools have access to adequate water supply and sanitation facilities

N/A

Agriculture


District Agriculture Sector Investment Program (UA36m loan & Grant 7m 24/11/2004- 31/12/2013)

o 343 Cooperative, community development officers, District Agricultural Extension Officers, regional project officers and Ward Training Facilitators have been trained and are now undertaking SACCOS training.

o 1,418 agricultural technology projects /enterprises established

o 2,854 micro-projects funded and implemented

N/A

Support to Lake Tanganyika Integrated Dev.(Tanzania only) (UA4.99m loan Tanzania only 17/11/2004-31/12/2013)

N/A

N/A

Marketing Infrastructure, Value Addition and Rural Finance Programme (MIVARFP) (UA40m loan 29/06/2011-31/12/2016)

N/A

N/A

Social Sector

Support to Maternal Mortality Reduction Project (UA40m loan 11/10/2006-30/06/2014)

o Nine new civil works contracts signed for rehabilitation, extension and construction of health facilities which had earlier stalled in Mara, Mtwara and Tabora regions.

o Construction of Mental Wing at Wete Hospital, Pemba completed.

N/A

Small Entrepreneurs Loan Facility II (UA20m loan 10/05/2010-31/12/2015)

o 93,364 clients reached with microfinance loans and 361 loans delivered to financial intermediaries

o 4,532 final beneficiaries (small entrepreneurs) and 1,042 staff of Microfinance Institutions trained

o 209,658 new jobs created by the loan beneficiaries/ entrepreneurs

Alternative Learning Skills and Development Phase II (UA15m loan 29/06/2011-31/12/2016)

o 11 staff of the Zanzibar Labor Commission trained on labor statistics and database management

o 180 individuals from Civil Society in 6 districts sensitized on issues of youth unemployment and other challenges facing Zanzibari youth

o 100 new business start-ups by graduates of Skills Development Centers (50% owned by women)

o 300 graduates from Skills Development Centers employed annually


Table A.6. Uganda: Selected results achieved during January-June 2013

Project Title

Outputs

Outcomes

Transport

Road Sector Support Project 1 (27/04/2005 – 31/12/2013; UA 61.49m loan)

o 100 km of road upgraded from gravel to

bitumen standard

o Travel time between Kabale-Kisoro reduced

from 3 hours to 1 hour 20 minutes

Road Sector Support Project 2 (17/12/2007 – 31/12/2015; UA 58m loan)


bitumen standard

o Reduction in travel time between Kabarole

and Bundibugyo from 3.5 hours to 1.5 hours

Road Sector Support Project 3

(28/09/2009 – 31/12/2014; UA 80m loan)


bitumen standard

o Travel time is reduced by almost 50% from

1 to 1.5 hours to less than 1 hour

Energy Sector Bujagali Interconnection Project

(28/06/2007 – 31/03/2015; UA 19.21m loan)

o Construction of 100 km of transmission lines (220kv and 132 kV) completed

o Construction of 1 substations and upgrading of 1 substation completed

o Thermal energy costing USD 0.23-0.25 per Kwh replaced with hydro power at USD 0.13 per kwh yielding public savings of USD 9.5 million per month from the elimination of energy subsidies

Water Supply and Sanitation Water Supply and sanitation Programme (WSSP) (15/10/2011 – 30/06/2016; UA 43.59m loan)

o Construction works on Kasanje, Kako, and Kakiri water supply systems completed

o Over 22,109 people have access to water

Kampala Sanitation Program(KSP) (16/12/2008 – 31/12/2014; UA 35m loan)

o Lubigi feacal/sewer plant 95% completed o Rehabilitation of old Bugolobi waste water

treatment plant completed

o Old Bugolobi plant serving 7% of Kampala district

Lake Victoria Water Supply and sanitation Programme (LV WATSAN) (17/12/2010 – 31/12/2015; UA 11.013m loan)

N/A N/A

Agriculture Community Agricultural Infrastructure Improvement Programme – Project 1 (CAIIP-1) (31/01/2007 – 31/12/2013; UA 30m loan)

o 480.4Km of community access roads completed

o 24.5Km of district feeder roads completed o 18 assorted agro-processing facilities (APF)

installed o Grid power extended to 5 APF sites

o Proportion of marketed produce has increased by 7.5% overall

o Farm gate prices have increased by 36%, overall

o Household income increased by 40%, overall

o Travel costs have reduced by 63%, overall o Post-harvest losses have been reduced by

72%, overall Community Agricultural Infrastructure Improvement Programme – Project 2 (CAIIP-2)

(17/09/2008 – 31/12/2014; UA 45m loan)

o 146Km of community access roads completed

o 185Km of district feeder roads completed

o N/A

Markets and Agricultural Trade Improvement Project (MATIP-1)

(25/03/2009 – 31/09/2015; UA

o Construction of 7 main markets is on-going with works completed up-to 80%

N/A


22.99m loan) Community Agricultural Infrastructure Improvement

Programme – Project 3 (CAIIP-3) (30/05/2011 – 31/12/2016; UA 40m loan)

N/A N/A


About the African Development Bank Group

The African Development Bank Group – which comprises the African Development (ADB), the African Development Fund (ADF) and the Nigeria Trust Fund (NTF) – aims is to promote the economic development and social progress of its regional member countries. It contributes to improving the living conditions of the populations, as well as creating, expanding and rehabilitating productive and social investments. It finances development and structural adjustment projects and programs, provides advisory services and stimulates investments from other sources of finance. Although the ADF and NTF are legally and financially distinct from the ADB, they share the same staff, and their projects are subject to the same standards.

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